Lenders to troubled tea maker McLeod Russel, part of financially stressed Williamson Magor Group, have formed a committee for appointment of a credit rating agency (CRA) for assessing the possible credit rating of the company. The modified draft resolution plan will be placed before the bankers for necessary approvals after obtaining the final valuation of tea estates and other assets and the credit rating.
In a stock exchange filing on Monday, McLeod Russel said the proceedings initiated under the Insolvency and Bankruptcy Code pursuant to a petition filed by a corporate lender was closed following a settlement arrived at with the lender in the second quarter last fiscal. Following this, the lenders (bankers) re-initiated the resolution process.
“Inter-creditor agreement (ICA) for arriving at and implementing the resolution plan has been signed by all the lenders (bankers). The forensic audit for utilisation of funds borrowed in the past, conducted on behest of lenders had been completed earlier and finding on utilisation of funds borrowed had been accepted by them. Techno economic viability (TEV) study carried out earlier has been re-vetted and confirmed. Valuation of tea estates and other assets are currently in process and will be completed in due course of time,” the filing said, adding the lenders have formed a committee for appointment of a CRA for assessing the possible credit rating of the company.
“The draft Resolution Plan, prepared by SBI Capital Markets, one of the leading investment banker along with their recommendation concerning resolution plan has been modified in terms of Inter-Creditor Agreement (ICA) and the same will be placed before the bankers for necessary approval etc, after obtaining the final valuation of the assets and credit rating of the company,” the company said.
Notably, the lenders have entrusted LSI Financial Services for revisiting the viability of operations of the company and suggesting operational improvements needed for each of its tea gardens before restructuring the outstanding debt.
Interestingly, the company’s lenders had in 2019 appointed LSI Financial Services to undertake a techno-economic feasibility study to formulate a resolution plan for the tea maker outside the scope of the insolvency resolution. As the banks are now keen to restructure the debt, they have entrusted LSI for revisiting the viability of operations.