A consortium of 27 lenders, led by State Bank of India, have approved part conversion of Kolkata-based financially troubled Electrosteel Steels’ about Rs 2,507 crore worth debt into equity shares under the SDR scheme.

Subject to approval of the shareholders and others, “Considered and taken on record Strategic Debt Restructuring (SDR) Package approved by Joint Lenders’ Forum …for conversion of part of debt aggregating to Rs 2,507 crore into 250.75 crore equity shares of the company of Rs 10 each,” the company informed the stock exchanges.

The company, pursuing an integrated steel making project at Bokaro in Jharkhand, has amassed a debt burden of over Rs 9,600 crore.

SDR aims to allow banks to take majority ownership of troubled firms and look for new owners. It allows banks to classify the debt in question as "standard", rather than bad, during the 18 month process.

As on September end, the promoters’ holding in Electrosteel Steels stood at 45.23 per cent.

“Considered and approved increase in authorised share capital of the company pursuant to SDR package, subject to approval of the shareholders and such other approvals as may be required,” the company filing added.

The company would convene an extra ordinary general meeting of the company’s shareholders on Thursday, January 7, 2016 to consider and approve the SDR.

Electrosteel Steels’ accumulated losses at the end of 2014-15 stood at Rs 1,356 crore against its peak net worth of Rs 2,227 crore.

The shares of Electrosteel Steels ended at Rs 3.93 per share, lower by 0.25 per cent over its previous close on BSE.

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