ABG gets Indian banks’ 2nd highest ever CDR package
1 April 2014 5:10 AM IST
This is the second largest CDR package in the history of India's banking sector. The largest CDR package was cleared in July, 2013 for the engineering and construction major Gammon India when its Rs 13,500-crore loan was rescheduled for a 10-year tenor at lower interest rate.
With the ABG Shipyard deal, the total loan recast in FY 2014 has sniffed at a whopping Rs 1 trillion, taking the overall CDR book of banking system well past Rs 3.7 trillion. Both leading lenders and the company confirmed the development.
‘At the March 24th meeting of the CDR cell, the lenders have cleared our proposal to recast Rs 11,000 crore of our loans. With this package, our effective interest rate will be 11 per cent, as against 13.5 per cent now. The package includes a two-year moratorium on interest payment apart from a fresh working capital loan of Rs 1,800 crore. The is rescheduled for eight years now,’ said ABG Shipyard Chief Financial Officer Dhananjay Dattar.
The troubled Surat-based shipbuilder, which moved the CDR cell last November, has a debt of Rs 11,500 crore on its books. This includes Rs 2,000 crore of term loans, Rs 7,700 crore of working capital loans and Rs 1,800 crore of fresh working capital loan extended by the consortium led by ICICI Bank, Dattar said. The deal got delayed as lenders were not satisfied with the guarantees the promoters were offering as also their inability to bring in fresh capital of Rs 300 crore.
When contacted an official of State Bank of India, which has an exposure of Rs 1,600 crore to the largest private sector ship-builder in the country, confirmed the CDR deal but did not offer details. Dattar said the promoters, including Chairman Rishi Agarwal, who holds close to 67 per cent stake in ABG Shipyard, have pumped in Rs 230 crore into the company for the deal to go through.
According to banking sources, the consortium leader ICICI Bank has around Rs 2,600 crore exposure to the company, followed by SBI (around Rs 1,600 crore). The other lenders include IDBI Bank (Rs 1,400 crore) PNB, BoB and Exim Bank, having Rs 700 crore each. The figures, however, could not be independently verified with respective banks. Dattar said the troubled shipbuilder has as many as 66 orders worth around Rs 9,000 crore from the Navy, the Coast Guard and Halul Offshore among others. But it has been unable to execute them for want of funds. However, he hoped that with the fresh working capital and interest payment moratorium, the company will easily come out of the trouble over the next three years.
Describing their CDR as being different from other ones, Dattar said while most other troubled companies have large long-term debt on their books, his firm has only Rs 2,000 crore as term loans on book which will help it come out of deep water quickly. ABG Shipyard reported a net loss of over Rs 156 crore on revenue of Rs 284.5 crore, down 40 per cent Y-on-Y, in the December quarter. Against this in FY13 its net income stood at Rs 107.13 crore, down from Rs 180.3 crore the last fiscal.
The CDR got through after Agarwal provided personal guarantees and pledged a large portion of his 66.8 per cent stake valued at over Rs 600 crore, while holding firm ABG International gave corporate guarantee, said banking sources. The Agrawals are also into cement business under ABG Cement. But both companies don't hold any stake in each other. The company has its shipbuilding facility at Dahej in Gujarat. The value of loan recast rose this fiscal to Rs 1 trillion now, while CDR referral crossed Rs 1 trillion. February alone saw Rs 4,300 crore being recast across six companies, while in January this was Rs 3,500 crore. Those in the CDR pipeline include Orchid Pharma's Rs 2,100 crore loan, Chennai-based Surana Industries' Rs 900 crore loan and Mumbai-based truck-maker AMW's Rs 300 crore loan.
Given the economic slowdown, bankers expect at least Rs 20,000 crore more loans coming into the CDR cell in March. The CDR cell, an RBI-appointed forum of bankers set up in early 2000s, takes a call on individual debt recast packages. All public sector and leading private lenders apart from NBFCs are its members.
For a restructuring package to be approved, 75 per cent of the lenders by value and 60 per cent by number have to agree to the proposal and the promoters must infuse 25 per cent of the fresh loan being sought as fresh capital.
With the ABG Shipyard deal, the total loan recast in FY 2014 has sniffed at a whopping Rs 1 trillion, taking the overall CDR book of banking system well past Rs 3.7 trillion. Both leading lenders and the company confirmed the development.
‘At the March 24th meeting of the CDR cell, the lenders have cleared our proposal to recast Rs 11,000 crore of our loans. With this package, our effective interest rate will be 11 per cent, as against 13.5 per cent now. The package includes a two-year moratorium on interest payment apart from a fresh working capital loan of Rs 1,800 crore. The is rescheduled for eight years now,’ said ABG Shipyard Chief Financial Officer Dhananjay Dattar.
The troubled Surat-based shipbuilder, which moved the CDR cell last November, has a debt of Rs 11,500 crore on its books. This includes Rs 2,000 crore of term loans, Rs 7,700 crore of working capital loans and Rs 1,800 crore of fresh working capital loan extended by the consortium led by ICICI Bank, Dattar said. The deal got delayed as lenders were not satisfied with the guarantees the promoters were offering as also their inability to bring in fresh capital of Rs 300 crore.
When contacted an official of State Bank of India, which has an exposure of Rs 1,600 crore to the largest private sector ship-builder in the country, confirmed the CDR deal but did not offer details. Dattar said the promoters, including Chairman Rishi Agarwal, who holds close to 67 per cent stake in ABG Shipyard, have pumped in Rs 230 crore into the company for the deal to go through.
According to banking sources, the consortium leader ICICI Bank has around Rs 2,600 crore exposure to the company, followed by SBI (around Rs 1,600 crore). The other lenders include IDBI Bank (Rs 1,400 crore) PNB, BoB and Exim Bank, having Rs 700 crore each. The figures, however, could not be independently verified with respective banks. Dattar said the troubled shipbuilder has as many as 66 orders worth around Rs 9,000 crore from the Navy, the Coast Guard and Halul Offshore among others. But it has been unable to execute them for want of funds. However, he hoped that with the fresh working capital and interest payment moratorium, the company will easily come out of the trouble over the next three years.
Describing their CDR as being different from other ones, Dattar said while most other troubled companies have large long-term debt on their books, his firm has only Rs 2,000 crore as term loans on book which will help it come out of deep water quickly. ABG Shipyard reported a net loss of over Rs 156 crore on revenue of Rs 284.5 crore, down 40 per cent Y-on-Y, in the December quarter. Against this in FY13 its net income stood at Rs 107.13 crore, down from Rs 180.3 crore the last fiscal.
The CDR got through after Agarwal provided personal guarantees and pledged a large portion of his 66.8 per cent stake valued at over Rs 600 crore, while holding firm ABG International gave corporate guarantee, said banking sources. The Agrawals are also into cement business under ABG Cement. But both companies don't hold any stake in each other. The company has its shipbuilding facility at Dahej in Gujarat. The value of loan recast rose this fiscal to Rs 1 trillion now, while CDR referral crossed Rs 1 trillion. February alone saw Rs 4,300 crore being recast across six companies, while in January this was Rs 3,500 crore. Those in the CDR pipeline include Orchid Pharma's Rs 2,100 crore loan, Chennai-based Surana Industries' Rs 900 crore loan and Mumbai-based truck-maker AMW's Rs 300 crore loan.
Given the economic slowdown, bankers expect at least Rs 20,000 crore more loans coming into the CDR cell in March. The CDR cell, an RBI-appointed forum of bankers set up in early 2000s, takes a call on individual debt recast packages. All public sector and leading private lenders apart from NBFCs are its members.
For a restructuring package to be approved, 75 per cent of the lenders by value and 60 per cent by number have to agree to the proposal and the promoters must infuse 25 per cent of the fresh loan being sought as fresh capital.
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