Lenders to troubled tea maker McLeod Russel, part of financially-stressed Williamson Magor Group, have entrusted financial service provider 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 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, according to sources.
For the present assignments, LSI officials will visit every tea garden of the company to evaluate the present status and suggest improvements needed for enhancing operational and financial efficiencies in the next five years, sources said.
The company’s debts stand at around Rs 2,000 crore. Earlier, it had sold tea estates in Assam and the Dooars to reduce the debt. Its financial creditors are ICICI Bank, HDFC Bank, SBI, Yes Bank, RBL Bank, Axis Bank, Indian Bank, Punjab National Bank and UCO Bank, among others.
Earlier this month, in a stock exchange filing, McLeod Russel said all its banking lenders have signed an inter creditor agreement (ICA) to provide for ground rules for finalisation and implementation of a resolution plan in respect of the company under the Reserve Bank of India’s directions for ‘Prudential Framework for Resolution of Stressed Assets’ which came into effect in June 2019.
Interestingly, Williamson Magor group’s engineering entity McNally Bharat Engineering Company’s problems deepen as an arbitrator at the International Chamber of Commerce Court, Singapore, has asked the company to pay around Rs 114 crore as damage to an investor of its subsidiary company.
McNally Bharat Engineering (MBE) had entered into a share purchase agreement with EIG (Mauritius) Limited, which invested in its subsidiary McNally Sayaji Engineering. “In order to resolve disputes relating to their rights as per agreement, the investor submitted its request for Arbitration to the International Chamber of Commerce Court, Singapore. The Arbitrator awarded a dissenting opinion requiring the company to pay damages amounting to Rs 11401.90 lakh, with interest. The company has challenged the said award in the High Court of Republic of Singapore, the order is reserved,” McNally Bharat Engineering said in a stock exchange filing on last Thursday.
“The Calcutta High Court allowed enforcement of the said Arbitral Award as a decree of the court on November 10, 2021 on petition filed by ElG (Mauritius) and made a direction upon the company to restrain from dealing with or alienating any of its assets and also file an affidavit for disclosing all assets within a period of ten weeks from the date of service of this judgement,” McNally Bharat said, adding it was exploring legal option on this matter.