Consortium of banks recast Lanco Infratech’s Rs 8,000-cr debt, biggest in quarter

MUMBAI: A consortium of 27 banks has decided to throw a lifeline to Lanco Infratech by restructuring its Rs 8,000 crore loan, making it the biggest debt recast this quarter.

The decision was taken at the corporate debt restructuring meeting held on Wednesday where lenders led by ICICI Bank agreed to provide additional loan of Rs 3,500 crore to the company. Under the terms, promoter L Madhusudhan Rao will infuse Rs 200-300 crore as equity.

Lanco Infratech is the holding company of Lanco group, which has interests in power, road and construction. The Rs 3,500-crore additional loan includes Rs 2,500 crore of fundbased limits like working capital loan and Rs 1,000 crore of non-funds limits like letter of credit and guarantees.

In response to an email query, Lanco Infratech said: “With the CDR funding, the company will be able to pay its vendors, suppliers and contractors, thereby normalising its EPC activities.” Lenders were divided for many months over recasting Lanco’s loan. While some opposed it on grounds that the additional loan required was too high, others felt that the company needed to recast the entire Rs 40,000 crore group debt rather than taking a piece meal approach of recasting the loan of one group company, Lanco Infratech.

“However, lenders decided to keep their difference aside because if we decline to recast the loan, the company may have failed to repay dues on time, forcing us to classify the loan as non performing asset,” said a bank officer on condition of anonymity.