GTL Ltd approaches Delhi High Court to challenge IFCI's seizure

NEW DELHI: GTL Ltd, the flagship company of the Global Group, has approached the Delhi High Court to challenge IFCI’s seizure of a 18% stake in sister concern GTL Infrastructures, a person familiar with developments told ET.

In July, IFCI that had lent Rs 250 crore to GTL Infra, backed by some assets of the company as well as a share-backed guarantee from GTL, acquired 18% in GTL Infra by invoking a pledge.

GTL had signed a non-disposable undertaking with IFCI. The instrument is similar to a pledge but it is not declared as one under regulations by the Securities and Exchange Board of India. When GTL shares plummeted, losing nearly 60% in a single day, a default on the undertaking occurred resulting in the IFCI action.

A GTL spokesman declined to comment as the matter is subjudice. In the agreement, GTL Infra was expected to maintain the value of collateral at two times the loan. Once this limit was breached, IFCI converted the undertaking into a pledge and acquired shares worth around Rs 250 crore.

GTL Infrastructure has since approached all its lenders to change the terms of its debt, a process known as corporate debt restructuring. The company has not been able to fully service its debt after a change in business environment, resulting in lower usage of towers, and steady increase in lending interest rates.

GTL Infrastructure had acquired 17,500 telecom towers from service operator Aircel for Rs 8,062, much of which was funded by debt. The company has accumulated borrowings of almost Rs 12,000 crore, and is paying interest of around 12%, compared with 8% at the time it had borrowed.

IFCI’s move secured its loan to GTL Infra from the corporate debt restructuring process. ICICI has Bank also executed a similar agreement acquiring 29% in GTL.

However, the Global Group has not moved against the Bank yet. It is possible that the two are trying to work out terms separately, said an analyst familiar with the situation, asking not to be named.

IFCI also issued a “No Dues” certificate to GTL Infra post its acquisition, but still continues to hold a pledge on some of its shares. GTL has also challenged this.