Gammon India to convert Rs 14,800 crore debt into equity

NEW DELHI: Reeling under huge debt, engineering firm Gammon India today announced a major loan restructuring exercise under which it would convert debt totalling over Rs 14,800 crore into equity and lenders would be issued fresh shares worth more than Rs 4,500 crore.

Gammon's Corporate Debt Restructuring (CDR) package was approved in June this year.

According to the company, its board has approved conversion of restructured debt -- worth Rs 14,814.17 crore -- into equity shares.

The company would also issue over 34 crore shares, at a price of Rs 27.05 apiece, aggregating to Rs 929.99 crore to the lenders on preferential basis.

This issue would be towards conversion of fund-based facilities -- working capital term loan and funded interest term loan -- at any time during the CDR package implementation.

Besides, Gammon's board has approved issuance of more than 134 crore shares priced at Rs 27.05 each to the lenders.

These shares, to be alloted on preferential basis, would be worth around Rs 3,633.82 crore and they would be issued "on the happening of an event of default and/or any amount outstanding beyond seven years from the date of CDR Letters of Approval", according to a regulatory filing.

All these proposals were discussed at Gammon's board meeting held today.

Besides these proposals, the company would seek shareholders' nod to authorise the board to borrow in excess of the paid up capital and free reserves up to Rs 17,000 crore.

The filing said approval from shareholders would also be sought for authorising the board to "create charge/ mortgage/ hypothecation on all or any of the properties of the company u to Rs 17,000 crore".

Further, the company plans to increase its authorised share capital to Rs 15,047 crore from existing Rs 176 crore.

Gammon's market capitalisation stood at Rs 176 crore at the end of today's trading on the BSE.

At the end of September quarter, promoters' had 35 per cent stake in the company and out of that 93.50 per cent were pledged.