Lenders to Chennai-based GVR Infra Projects have sent their proposal to recast the company’s debt of R2,122 crore through the sustainable structuring of stressed assets (S4A) route to the overseeing committee (OC), mandated by the Reserve Bank of India (RBI), senior bankers told FE.
According to bankers, there were some technical problems regarding the company’s proposal which have now been fixed by the joint lenders’ forum led by State Bank of India (SBI) and sent for the approval from the OC. Since the RBI allowed banks to bifurcate a company’s debt into sustainable and unsustainable in June 2016, the OC has so far cleared recast of HCC and GKC Projects.
Other lenders to the company include Punjab National Bank, Vijaya Bank, IDBI Bank, ICICI Bank, Axis Bank, Allahabad Bank, Canara Bank, Bank of India (BoI), State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Mysore.
Incorporated in 2001, GVR is engaged in the construction contract business of providing EPC services across various infrastructure sectors and development and management of road assets, according to its website. An OC, comprising eminent persons, has been constituted by the Indian Banks’ Association in consultation with the RBI, and its decision is binding on all members of the consortium.
The S4A scheme has been viewed as an improvement over the strategic debt restructuring (SDR) plan since promoters remain with the firm, while SDR envisages bringing in a new set of promoters. The S4A scheme is also more lenient since bankers can take an effective haircut of 50%.
The scheme, however, does not permit changes in the terms of either the moratorium or payments of principal or interest. Banks are permitted to convert the ‘unsustainable’ part of the debt into equity or redeemable cumulative optionally convertible preference shares.
To be eligible for the scheme, the project should have commenced commercial operations and the total exposure (including accrued interest) should be more than R500 crore. Moreover, lenders need to have provided for at least 20% of the total loans.