Banks ready to cut rate by 2% for GTL

Written by Sitanshu Swain | Mumbai | Updated: Nov 22 2011, 07:32am hrs
The consortium of lenders to the debt-laden telecom infrastructure company GTL has asked the promoters to bring in 15% of the total debt of close to R17,000 crore as equity to facilitate the corporate debt restructuring (CDR) package. At a meeting of promoters, banks and CDR officials held in Mumbai on Monday, banks offered to lower the interest rate on the loans by 2%.

The final proposal will be approved on November 29,'' sources at the CDR Cell, which prepares debt recasting plans for cash-strapped companies, said. Meanwhile, ICICI Bank proposes to transfer its debt from GTL to Chennai Network (CNL), a company promoted by GTL Infra.

Sources say ICICI Bank has proposed to transfer this stake to GTL promoters, in exchange for transferring its debt exposure to the books of Chennai Networks. This move will help hedge ICICI Bank against a default by the parent company. In July, ICICI Bank assumed a 29% stake in GTL by invoking the pledged shares. The bank recovered shares worth nearly R200 crore at the time, against loans of R500 crore.

GTL is the promoter of GTL Infrastructure and all three companies, GTL, GTL Infra, CNL are currently undergoing debt restructuring.

There are 25 lenders to the companies including Standard Chartered Bank, State Bank of India, Union Bank of India, Central Bank, Indian Overseas Bank, ICICI Bank, Punjab National Bank. GTL is indebted to the extent of R6,000 crore while GTL Infrastructure has loans about R11,000 crore.

GLT Infra had taken a R650 crore loan from ICICI bank against a guarantee from Chennai Networks Infrastructure. GTL is an equipment service provider for telecom tower companies and holds no tangible assets on the ground.

On the other hand, Chennai Networks was formed to acquire the tower assets of Aircel in 2010. The transfer of debt to CNIL will increase its outstanding debt under restructuring from the current R5,900 crore.