Lenders to Pipavav Defence & Offshore Engineering have finally approved the much-delayed CDR (corporate debt restructuring) package. They have a loan exposure of close to ₹7,500 crore to the company.

This is one of the largest cases to be restructured by the CDR cell in recent times.

Banks are likely to provide an additional working capital loan of about ₹5,200 crore in addition to an interest concession to the company, which has presence in naval and commercial ship building, heavy engineering and offshore oil and gas.

The interest on the loan has now been reduced to 11 per cent from 13-13.5 per cent that various banks charged earlier, said a person in the know of the development. In addition, the loan moratorium has also been extended by up to two years.

After the CDR process, the overall exposure of the banking sector to India’s first private sector warship maker and the country’s largest shipbuilding and heavy industry company, is likely to go up to nearly ₹12,000 crore.

“Barring one or two banks, the CDR has been approved by a majority. As of now, the promoters will be bringing in their share of equity to get the concessions,” the person said.

Current norms

Under the present norms for restructuring under the CDR, 60 per cent of the lenders by number and 75 per cent of the lenders by loan value have to agree for a case to be approved under the CDR cell.

Early this week, led by IDBI Bank, 23 banks agreed to approve the CDR, which was formalised on Thursday.

The restructuring will provide relief to the defence firm not just from the debt point of view, but also “help Pipavav maintain competitiveness in the market” as it is set to get acquired by Anil Ambani-owned Reliance Infrastructure, a senior official at the company said.

This comes just ahead of the deadline of March 31, when the regulatory forbearance window will close for banks.

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