Lenders to the loss-making Visa Steel have made it clear the firm’s sister concern Visa Energy must withdraw the case filed against them in the Calcutta High Court before any debt resolution plan takes shape, sources told FE. The case relates to pledged shares of Visa Power that were transferred to State Bank of India (SBI) following the sale of a loan to it by Infrastructure Leasing & Financial Services (IL&FS).
The exposure to Visa Steel of R2,978 crore has been classified by lenders as a non-performing asset. Although bankers had initiated a strategic debt restructuring (SDR) plan for the Kolkata-based firm, they have been unable to make any headway. Visa Steel reported a loss R584 crore in 2015-2016 on the back of R1,003 crore in revenues. Interest costs for the year more than doubled to R445 crore.
“We have been talking to Visa Steel and have asked them to withdraw the case if they want a resolution to their debt problems,” a banker said. According to people familiar with the matter, the case dates back to August 2015 when IL&FS — a lender to four Visa Group companies — sold its exposure of Rs 62 crore to SBI and also transferred pledged shares of Visa Power worth R25 crore to SBI. Questioning the validity of the transfer, Visa Energy filed a suit claiming the agreements for the transfer of loans had not been discussed with it.
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According to the case documents, while Visa Energy had requested IL&FS to reschedule its loan repayments, the lender did not agree to the request. The document notes the Visa Group had given an impression it would not be in a position to pay the entire amount at one go.
“However, having regard to the impending danger and Damocle’s Sword hanging on the head of the petitioners in view of its failure to repay the loan, the petitioners now want to redeem the pledge by depositing a sum of R25 crore,” it said.
In an order dated September 16, 2015, justice Soumen Sen of the Calcutta High Court said that Visa Energy is entitled to claim discharge from its obligation once the debt is repaid and exercises its right to redeem the pledge before the said shares are dealt with and/or put to sale.
“In the event the petitioners deposit with the State Bank of India a sum of R25 crore within a week from date, the pledged shares should not be sold for the time being till the matter is being finally heard and disposed of,” he had said. The case has been dragging on and the shares remain with SBI; at a hearing on April 6, 2016, the case was adjourned.
Visa Steel is by promoted by Visa Infrastructure and Visa International, which hold 40.35% and 21.63% of the company, respectively. Vishal Agarwal is the vice-chairman and managing director of the company. An email sent to Visa Steel on Friday remained unanswered till the time of going to press.
In September 2015, lenders had decided to convert a large portion of their loans into equity via the SDR scheme. Among the lenders are Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank a few banks from the SBI group and Syndicate Bank.
