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Troubles of debt-laden ABG Shipyard will continue for a while as some of the 22 lenders have opposed the country’s largest private shipbuilder’s proposal to restructure its Rs 11,150-crore loan, according to banking sources.
“The Rs 11,150-crore CDR proposal of ABG Shipyard did not come up for consideration at yesterday’s meeting as the proposal lacked the backing of the majority of lenders,” a public sector banker which supports the recast plan told PTI.
The banker did not elaborate on the reasons for the lenders’ opposition or named them. However, he said the proposal will come up again at the next meeting.
If the CDR proposal works out, banks may have to take a haircut of around Rs 1,200 crore, according to another banker who also did not want to be identified. The company promoter, Rishi Agarwal, could not be contacted for comments.
The Mumbai-based ABG Shipyard has been facing cash flow issues due to economic slowdown that began in the aftermath of the global credit crisis of 2008 and is also seeking an additional Rs 1,200 crore working capital loan, the official said.
The company has short-term loans worth Rs 10,650 crore, which include working capital loans, letters of credit and guarantees, from a consortium of 22 banks. That apart, the company has a long-term loan of Rs 2,100 crore, out of which the company is seeking to restructure Rs 11,150 crore.
The lenders’ consortium is led by ICICI Bank, and has the largest exposure to the shipbuilder with about Rs 2,600 crore, while State Bank of India around Rs 1,600 crore and IDBI Bank about Rs 1,400 crore.
Other lenders include Punjab National Bank, Exim Bank and Bank of Baroda, with each of them having around Rs 700 crore each.
Under the CDR mechanism, which is a forum opened by the Reserve Bank in August 2001 to help companies facing cash-flow issues, companies can approach their lenders and get the loans reworked, which normally involves a two-year moratorium on interest payment and from third year on begin servicing the loan at a lower interest rate.
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