Lanco Infratech Ltd will seek its shareholders' nod to increase the company’s authorised capital from Rs 500 crore to Rs 1,200 crore and to allot shares to lenders in line with the CDR package.
The lenders will have the right to convert debt into equity if the debt obligations are met.
The move to hike capital is part of the corporate debt restructure mechanism worked out by the diversified infrastructure company.
“We expect the entire process of securing shareholders’ nod to be concluded before March. This will then pave the way for making arrangements with various bankers, who have taken part in the debt restructure process,” T. Adibabu, Chief Operating Officer, Finance, Lanco Infratech Ltd, told
The restructure facility for Rs 11,155 crore has been extended by a consortium of 25 lenders and includes restructured term loan, working capital and working capital term loan.
Following the agreement, the shareholding of the lenders will be 65.83 per cent. This will eventually depend upon exercise of the option to convert the debt if the debt obligations are not met. If converted, the promoters' holding will come down to about 25.26 per cent.
The Corporate Debt Restructuring Empowered Group, RBI, had cleared a CDR package for the company in December 2013 and a Master Restructure Agreement was signed on December 27, 2013, between the company management and the CDR lenders to facilitate the operation of the agreements entered into, and to execute necessary documents, including share allotments, under the agreement.
The company has also sought members’ nod to increase its borrowing limit to Rs 15,000 crore. As part of the restructuring agreement, the lenders will have the option to convert debt into equity shares in terms of the corporate debt restructure. The lenders will have the right to convert if the company does not meet its debt obligations. And if these companies exercise the option of conversion of debt into equity, the proportionate debt will be reduced, Adibabu said.
A part of the working capital loan will be converted into equity. The company is seeking the shareholders nod to facilitate this. Even a part of the priority loan has a facility to convert it into equity.
As part of the package, the promoters have infused fresh funds of Rs 152 crore and the shareholders’ nod will be taken to convert this into equity.