Reliance Defence and Engg gets lenders’ approval to exit CDR

Reliance Defence and Engineering (RDEL) has secured approval from a consortium of lenders to exit its corporate debt restructuring package.

The consortium of lenders, led by IDBI, has agreed to the exit plan of RDEL, a subsidiary of Reliance Infrastructure, with a longer maturity period for loans worth about Rs 6,800 crore, sources said.

The lenders have also given their go-ahead to implementation of refinancing scheme of RDEL.

Both the proposals were presented to the CDR Empowered Group’s (EG) meeting on March 29 and approved by the requisite majority of CDR lenders.

Reliance Infrastructure refused to comment.

IDBI has confirmed to the Ministry of Defence the approval granted by the EG to RDEL’s CDR exit plan and refinancing scheme.

According to sources, the confirmation from IDBI makes RDEL eligible for participating in all future contracts of the Navy.

Now, RDEL and Larsen & Toubro are the only two private sector shipyards that will compete with government-owned shipyards for prestigious contracts for making submarines, landing platform dock (LPD) and corvette.

As per the refinancing scheme approved by the EG, about Rs 6,800 crore of RDEL debt will be refinanced with maturity of about 20 years and lower interest rate.

Exiting CDR is also expected to provide increased financial manoeuvring to the company.

Reliance Infrastructure has increased its shareholding in RDEL to nearly 31 per cent. RDEL’s current order stands at over Rs 5,300 crore from the Navy, the Coast Guard and commercial vessels.

Reliance Infra had acquired Pipavav Defence and Offshore Engineering Company in March 2015, which was later renamed as Reliance Defence and Engineering.

Immediately after the acquisition, Reliance Group had announced its plans to exit CDR.

The Reserve Bank of India had also given its nod to RDEL to exit the CDR package.

The stock of RDEL gained 3.36 per cent or Rs 2.15 to Rs 66.05 on the BSE on Thursday.