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Lenders, led by SBI, are considering restructuring troubled textile manufacturer Alok Industries’ debt of over ₹18,000 crore, under the S4A (Scheme for Sustainable Structuring of Stressed Assets), sources said.
This follows the lenders’ failed attempt to implement a strategic debt restructuring (SDR) in the company, said bankers, adding that a techno-economic viability study is currently on.
“In the last meeting of the joint lenders forum (JLF), which took place after the SDR failed, there was a discussion that S4A can be implemented at Alok Industries. A decision on this will be taken soon,” said a banker, adding that since the city-based company has a good cash flow, S4A is possible.
The Reserve Bank issued the S4A guidelines last month to help both banks and struggling companies to tackle debt. The scheme allows debt-laden companies to get working capital from banks, unlike the SDR scheme where a company is not eligible for fresh funding from lenders.
So far, only a few companies, such as HCC have been able to get the S4A option implemented.
The S4A scheme envisages determination of a sustainable debt level for stressed borrowers, and bifurcation of outstanding debt into sustainable debt and equity/quasi-equity instruments.
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