Lenders of infrastructure firm IVRCL to convert loans into 51% equity holding

NEW DELHI: Lenders of debt-ridden infrastructure firm IVRCL Ltd have decided to convert part of their loans to the highways developer into a 51 per cent or more equity holding. The joint lenders forum (JLF) in a meeting have approved strategic debt restructuring (SDR) in the company.

"SBI — monitoring institution acting on behalf of the lenders — has informed the company that JLF have approved the SDR conversion package and that the lenders will convert part of the debt of the company into equity," the company said in a BSE filing.

The SDR will be done in tranches at the price of Rs 8.765 per equity share of face value of Rs 2 each, it added.

"Lenders will convert part of the debt of the company into equity, in one or more tranches, at the price of Rs 8.765 per equity share of face value of Rs 2 each, enabling the lenders to collectively hold 51 per cent or more of the total share capital of the company, pursuant to provisions of Sebi," the company said.

The loans and advances by the company to its subsidiaries stood at Rs 434 crore on December 31, 2015, while the losses for nine months ending December 31, 2015, stood at Rs 796.49 crore.

The recovery of such advances to subsidiaries is dependent upon the completion of the projects and the operating performance.

The RBI’s SDR provision allows banks to take over the management of a firm after converting debt into equity in cases where debt restructuring has failed or is near failure. As per the provisions, banks can hold the equity for 18 months and, in the interim, sell assets or look for a new management for the company.