The Rs 2 face value stock of Gammon India Ltd, which has lately been trending towards its 52-week low, fell 1.45 per cent to close at Rs 13.57 on the BSE on Tuesday.

The financially troubled engineering company has gone in for a debt restructuring package. As a follow-up of its approved restructured debt, Gammon India is increasing its authorised share capital to Rs 15,047 crore from Rs 176 crore.

The engineering company’s total debt rescheduled under the CDR mechanism is worth Rs 14,814.17 crore (including short- and long-term loans as well as non-convertible debentures payable over a period of 10 years). Under the CDR package, lenders have the right to convert the restructured facilities into equity shares of the company. The promoters of the company also have the option to convert their fresh contribution of Rs 100 crore into equity capital.

The promoters of Gammon India have also pledged their shareholding (22.82 per cent) in the company in favour of the CDR lenders’ trustees — IDBI Trusteeship Services Ltd.

Guarantee Promoters have also provided personal and corporate guarantees and pledged shares of four subsidiaries of Gammon India.

Lenders have sanctioned a ‘priority loan’ for meeting the immediate financial needs of the company and waived off penal charges from the cut-off date to the date of implementation of the package. The package has also reduced the rate of interest by 1 per cent for the 15-month period - January 2013 to March 2014.

No panacea According to market analysts, CDR is no panacea for the company, which has been seeing its net losses burgeon and cash flows fall even though it has over 150 project sites across various States. It reported a net loss of Rs 311.49 crore compared with a net loss of 445.67 crore in 2012-13.

At the end of September quarter, the promoters had held 35 per cent equity in the company.

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