GTL
Infra lenders may sell loan to ARC
By Sangita Mehta ET Bureau July 20 2018
Mumbai: A consortium of lenders to GTL Infrastructure
plan to sell their loans to the struggling telecom tower company to Edelweiss
Asset Restructuring Company, which has offered cash payment of 60 per cent of
the loan amount and an equity upside, two bank officials said. The lenders, led
by Union Bank of India had sought bids for their Rs 4,000-crore loans to GTL
Infra using the Swiss-challenge method, whereby details of an unsolicited bid
is published and third parties are invited to better it.
The base price set for GTL Infra loan book was an offer made by Edelweiss ARC a couple of months ago, the two officials said on condition of anonymity. “We did not receive any other offers in the auction, so we have decided to go ahead with the offer from Edelweiss ARC,” one of them said. “Each bank in the consortium is in the process of seeking approval from the board and we expect to close the deal by the month-end,” he said. Edelweiss ARC, the country’s largest asset restructuring company, has offered to pay Rs 2,400 crore in cash for Rs 4,000 crore of debt that has turned sour for most banks. As per the deal, lenders will continue to hold a majority stake of 63 per cent in the company.
Banks had given mandate to Union Bank of India (UBI) to jointly sell the entire loan to attract a good offer. Senior officials of UBI and Edelweiss ARC declined to comment. GTL Infra is among the largeticket borrowers that could be dragged to bankruptcy court if lenders are unable to resolve its loans before August 31, as per an RBI circular.
The base price set for GTL Infra loan book was an offer made by Edelweiss ARC a couple of months ago, the two officials said on condition of anonymity. “We did not receive any other offers in the auction, so we have decided to go ahead with the offer from Edelweiss ARC,” one of them said. “Each bank in the consortium is in the process of seeking approval from the board and we expect to close the deal by the month-end,” he said. Edelweiss ARC, the country’s largest asset restructuring company, has offered to pay Rs 2,400 crore in cash for Rs 4,000 crore of debt that has turned sour for most banks. As per the deal, lenders will continue to hold a majority stake of 63 per cent in the company.
Banks had given mandate to Union Bank of India (UBI) to jointly sell the entire loan to attract a good offer. Senior officials of UBI and Edelweiss ARC declined to comment. GTL Infra is among the largeticket borrowers that could be dragged to bankruptcy court if lenders are unable to resolve its loans before August 31, as per an RBI circular.
GTL Infra suffered heavy losses partly due to
non-payment of dues by mobile service providers. The company has made a claim
of Rs 1,704 crore from Aircel, which had filed for insolvency proceedings a few
months ago. Lenders had about Rs 8,000-crore exposure in GTL Infra, which was
reduced to half through strategic debt-restructuring scheme. The scheme, which
is now discontinued, allows lenders to convert part of their loan to equity of
the companies that are facing financial stress and at the same time allows
banks to retain the account as a standard for 18 months, provided conversion
happens while the account is a standard account. Banks had to sell their stake
to new promoters within 18 months. On conversion of debt, lenders’ holding in
GTL Infra stood at 65 per cent while promoter Manoj Tirodkar held 19.5 per cent
stake. The balance equity stake is with the public.
Lenders
are keen to restructure the debt outside bankruptcy court since if the company
is referred to bankruptcy court, in all likelihood, the equity will be written
off. This means bankers would not get any upside if the company revives post
restructuring.
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