Infrastructure player IVRCL Ltd has initiated the process to rejig its debt of Rs 2,750 crore at the holding company level under the corporate debt restructuring (CDR) mechanism.
Under CDR, banks typically increase the repayment period of loans to stressed borrowers, offer a moratorium and reduce lending rates.
The Hyderabad-based company is the latest to join a list of companies seeking debt restructuring. Infra companies Lanco Infratech, Gammon and Soma have already sought CDR support to tide over the tough liquidity position in the current economic scenario.
Together with various special purpose vehicles, IVRCL has a debt burden of about Rs 5,000 crore.
The company’s lead banker is State Bank of India, and lenders’ consortium includes 21 banks.
“The company is tapping the CDR mechanism as the market conditions are bad and the liquidity situation is tough. Over the next few months, the focus will be on elections and thereafter, we will hit the monsoon phase that is bad for construction,” a company source said.
“Then, we will have three-four months for the new Government to settle. All these are expected to cause concern. Therefore, we have sought this process. This will provide us the option of delayed payment,” the source added.
Earlier, the company had divested a stake in three of its highway projects to TRIL, a Tata Group company. But the high interest rates ruling for more than three years and a slowdown in project execution due to the current economic situation and also due to delays in securing clearances for projects hitting their implementation have caused liquidity concerns.
It had also stayed away from taking up build–operate–transfer projects to focus on engineering, procurement and constructionworks.
IVRCL shares closed on Tuesday at Rs 14.90, up 1.71 per cent on the BSE.