Lenders Likely to Take Control of Lanco Infra
Both public and private, twenty five lenders, have secured an option to gain control over the sick infrastructure firm Lanco Infra, following one of the largest corporate debt restructuring (CDR) ,by conversion of 3,024 crore of loans into equity which involves 11,155 crore.
In a communication, seeking the approval of shareholders for the issue of shares on preferential basis to the lenders, the company said the banks and financial institutions agreed for the CDR package on December 27. The lenders have the option to convert restructured loans of up to 3,024 crore into equity as per the master restructuring agreement.
At present, the lenders have a nominal holding of 1.44% in the company. If they implement, the option it will enable the lenders to gain control over the company with a stake of 65.83% on the expanded equity base, whereas the holding of promoters will plunge to 25.26% from 70.2%.
The lenders includes Allahabad Bank, Andhra Bank, Axis Bank, Bank of Baroda, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, ICICI Bank, IDBI Bank, ING Vysya, India Overseas Bank, Jammu &Kashmir Bank, LIC, Oriental Bank of Commerce, Punjab National Bank, Punjab and Sind Bank, SBI, SBH, State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Patiala, Union Bank of India and United Bank of India.
L Madhusudhan Rao, Lanco group chairman confirmed, “Under the CDR package, the lenders will have an option to convert restructured loans to the extent of 3,024 crore into equity. But we don’t see the eventuality of lenders converting those restructured loans into equity and gaining control over the company.”
“The eventuality of lenders converting majority of 3,024 crore of loans into equity and gain control over the company takes place if the company fails to service the restructured loans and defaults on repayments as agreed under the CDR package in seven years, “said CFO T Adi Babu .
Source: Times of India
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