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IL&FS weighs plan to recast part of its stressed loans from banks, MFs

Infra News - Published on Thu, 23 May 2019

Image Source: SteelGuru
Infrastructure Leasing and Financial Services Ltd (IL&FS) said that its board is considering a plan to recast some of its stressed loans from banks and mutual funds. In an affidavit submitted to National Company Law Appellate Tribunal (NCLAT), IL&FS board is already considering a restructuring proposal from lenders for one of its special purpose vehicles in Uttar Pradesh. IL&FS also said it is willing to consider similar proposals for other troubled group firms to exit insolvency. The restructuring could involve seeking a reduction in interest rates and a modification of the terms of loans.

Lenders to Moradabad Bareilly Expressway Ltd (MBEL), an SPV building a state highway in Uttar Pradesh, have suggested releasing cash flows from the SPV’s bank accounts to the company’s financial and operational creditors. Since MBEL is classified as an ‘amber’ asset with regard to its solvency-that is, NCLAT has allowed MBEL to temporarily suspend payments to creditors- allowing MBEL to resume payments under new terms would give its lenders some relief.

The loan recast proposal was made by secured lenders India Infradebt Ltd, L&T Infrastructure Finance, L&T Finance, L&T Infrastructure Debt Fund, Bank of Baroda and Bank of India, the affidavit said. In return for releasing these cash flows, the lenders have proposed to reduce the interest rate and modify the terms of certain secured financial debt. If the proposal is approved by both IL&FS and the lenders, MBEL will be re-classified as a fully solvent “green" asset.

IL&FS had classified 55 entities as green, 13 as amber and 82 entities as red, in descending order of their solvency rates. The group has fund-based debt of INR 94,215 crore from external creditors, of which the ‘red’ entities account for INR 61,375.6 crore.

In the affidavit, IL&FS also provided an update on the sale process of various assets. Sale of the wind energy business to minority investor Orix Corp. is under way, and the Tripura government has offered to buy out IL&FS’s 26% stake in the ONGC Tripura Power Co. at 80% of face value. The power company has debt of INR 3,337 crore. Similarly, in other assets where IL&FS is part owner, the company is in talks to sell its shareholding to its joint partner, all of whom are governments or public sector companies. This includes the government of Gujarat for GIFT-City Co. (debt of INR 1,233 crore), Indian Oil for IL&FS Paradip Refinery Water Ltd (INR 747 crore), and the government of Tamil Nadu for the Tamil Nadu Water Investment Co. and New Tirupur Area Development Corp ( INR 579 crore).

IL&FS said that ONGC has offered to buy out the Mangalore SEZ (debt of INR 551 crore) at a “substantial discount to face value". IL&FS Solar Power Ltd, with debt of INR 632 crore, has not received any bids under the sale process. A public Swiss Challenge process will be invited for IL&FS Technologies Ltd, with debt of INR 111 crore, and binding bids are expected by 11 July. The sale of IL&FS Securities Services and ISSL Settlement and Transaction Services has been held up due to investigations carried out by Sebi and the Economic Offences Wing. The bidding process for the asset of IL&FS Thermal, IL&FS Transportation Networks, IL&FS Investment Managers, IL&FS Education are underway.

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Posted By : Rabi Wangkhem on Thu, 23 May 2019
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