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Uttam Galva offers 51% of outstanding loan payment to avoid asset auction - Report

Steel News - Published on Tue, 20 Mar 2018

Image Source: SteelGuru
PTI reported that Uttam Galva Steels Ltd has offered to settle the INR 5,654 crore loan default by paying 51 per cent the amount upfront to public sector banks so as to abort the auctioning of the company's assets. On March 15 wrote to the State Bank of India (SBI), proposing a one-time settlement of all dues of lenders through an upfront payment mechanism. Uttam Galva has offered to pay INR 2,884 crore upfront to settle with all of them and take company out of insolvency proceedings.

According to the 5-page letter, reviewed by PTI, the company proposed a one-time settlement (OTS) of the dues of lenders to the extent of 51 per cent of the outstanding claims as on the date of NPA, ie Q1FY17.

In the letter to SBI, Uttam Galva said its loan account had turned into an non-performing asset (NPA) during Q1 of 2016-17 fiscal year due to adverse operating conditions. It said “Being an OTS and not debt restructuring, the proposal doesn't fall under the requirements specified in the RBI guidelines of February 12, 2018 (on insolvency and bankruptcy proceedings). Hence, the procedure for debt restructuring mentioned in the circular such as independent credit evaluation etc may not be required.”

Stating that its proposal has minimum payment risk for the lenders as the entire amount is paid upfront, the company said that since the account has already been classified as D1 by the lenders and referred to NCLT, 50 per cent provisioning must have already been done by lenders. It said "In this case, an OTS of 51 per cent would not adversely impact the financial performance of the lenders. We once again request lenders to consider this proposal as it is in the best interest of all the stakeholders."

It added “In future, we assure you our complete cooperation in all the matters and reiterate our commitment to address all issues to your full satisfaction to the best of our ability.”

Stating that the company has tried for a resolution in "all possible manner," the letter said lenders neither accepted a proposal to bring in private equity investor AION Capital Partners nor did they agree to a strategic debt restructuring (SDR) offer.

SBI has the highest dues at INR 1,529 crore followed by Canara Bank - INR 857 crore and Punjab National Bank - INR 660 crore.

Source :

Posted By : Rabi Wangkhem on Tue, 20 Mar 2018
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