A 22-member lenders’ consortium led by ICICI Bank has failed to agree on a proposal from ABG Shipyard to recast its Rs 11,500-crore loan, a majority of which turned into dud assets on their books, sources said here on Sunday.
“There was no consensus on the terms of the loan restructuring proposal from ABG Shipyard at the corporate debt restructuring cell meeting held last Friday,” a senior official of a state-run bank told PTI today, adding that banks are not sure about the promoter’s ability to bring in fresh equity contribution of around Rs 300 crore.
Sources said the consortium has around Rs 2,600 crore exposure to the troubled company, while SBI’s (rpt) SBI exposure is around Rs 1,600 crore. The other main lenders include IDBI Bank with a stuck loan of Rs 1,400 crore, while Punjab National Bank and Bank of Baroda have around Rs 700 crore each and the Exim Bank has Rs 700 crore.
Another public sector banker said that promoters have already brought in Rs 80 crore as fresh equity, but they are not sure about their ability to bring in Rs 220 crore more.“If the promoters can bring in this amount before the end of the month, then it could still be worked out,” the source said.
The company has been looking to recast its Rs 11,500 crore loan since last November. In late January, lenders had agreed to throw a lifeline to the Surat-based shipyard, which is the largest private sector ship builder in the country.
It’s promoters, including chairman Rishi Agarwal hold close to 67 per cent stake in the company, which had reported a net loss of over Rs 156 crore on revenue of Rs 284.5 crore, down 40 per cent year-on-year, in the December quarter. Against this in FY13, its net income stood at Rs 107.13 crore, which was down from Rs 180.3 crore during the previous fiscalHowever, since the beginning of the current fiscal, thetide turned against the company, after it was unable to execute its pending orders due to a cash crunch, leading to defaults on its loan servicing to most of the lenders.
Bankers also want promoter Agarwal to provide personal guarantee and pledge 51 per cent of his 66.8 per cent stake valued at over Rs 600 crore, while the holding company ABG International must provide corporate guarantee.
If the loan recast goes through, banks would take a hair cut of Rs 1,000 crore and could convert Rs 1,000 crore of debt into equity after eight months.The company’s shares ended at Rs 248.50 last Friday on the BSE, down by 31 per cent from its 52-week high,and its market cap stood at a paltry Rs 1,265.4 crore.
Agrawal also runs a cement business under the brand ABG Cement, which promoters had hinted at selling, in order to raise equity, though neither ABG Shipyard nor the cement company hold any stakes in each other.
Its facility in Dahej, Gujarat, has so far delivered 149 vessels and has over Rs 16,000 crore worth of orders in hand, according to its FY13 annual report. Currently, it is building 43 vessels and a ship-lift at the facility.
The debt recast plan involves lenders collectively losing nearly Rs 1,000 crore, with a term loan of 1,800 crore extended for 10 years at an interest rate of 11 per cent to complete 43 vessels and a ship-lift at Dahej. It also involves banks providing Rs 1,500 crore as a funded interest term loan, another banker said.
It may be noted that the value of loans recast rose to Rs 74,000 crore while the corporate debt restructuring referral touched Rs 1 trillion even as the RBI has pegged that NPAs and recast loans would cross 10 per cent of the market this fiscal. February saw Rs 4,300 crore of assets being recast by six companies, while in January, this was Rs 3,500 crore.
Those in the corporate debt restructuring pipeline include Orchid Pharma’s Rs 2,100 crore, Chennai-based Surana Industries’ Rs 900 crore and Mumbai-based truck-maker AMW’s Rs 300 crore loans. Given the lingering slowdown, bankers expect at least Rs 15,000-Rs 20,000 crore more loans coming up for corporate debt restructing this month.