Bharati Shipyard promoters to infuse Rs 118 cr for CDR
Mumbai: The promoters of country's second largest private ship-builder Bharati Shipyard have agreed to infuse Rs 118 crore fresh capital into the debt-laden company, as a precondition for its Rs 5,800-crore debt restructuring plan, sources said.
"The promoters of Bharati Shipyard have agreed to the lenders' demand for a capital infusion of Rs 118 crore as part of its corporate debt restructuring (CDR) plan," sources with direct knowledge of the development said.
On June 1, the lenders consortium approved the Rs 5,800-crore CDR proposal of Bharati Shipyard.
"An empowered group of the consortium of lenders has agreed to recast Bharati Shipyard's entire outstanding debt of Rs 5,800 crore, which is inclusive of both fund-and no-fund based debt," sources said.
However, the development from Bharati Shipyard nor the bankers could not be confirmed. Senior officials of Central Bank and IDBI Bank, when contacted, said they cannot share client-specific details.
The ship-builder has fund and non-fund based debt of Rs 5,800 crore from as many as 25 banks, including State Bank, Central Bank of India and IDBI Bank, among others. The lenders' consortium is led by SBI.
The country's second largest private ship-builder had a debt of Rs 3,861 crore in its balance-sheet of FY12 end, and over Rs 2,000 crore of non-fund limits, taking the overall CDR scheme to Rs 5,800 crore.
Out of this, the fund-based debt of the shipyard is Rs 3,200 crore, while it has a working capital loan of around Rs 600 crore and the rest is non-fund-based limits.
The CDR scheme also involves converting 10 percent of the outstanding term loan of Rs 2,600 crore into compulsorily convertible debentures, which will later be converted into fresh equity, as per the Sebi norms, sources said.
The CDR programme has been prepared by SBI Caps and IDBI Capital Markets. Both the bankers as well as the lead arrangers could not be reached for comments immediately.
The repayment period of the CDR is 10 years with a moratorium of one year beginning from April 1, 2012. So the repayment will begin from April, 2013.
The development comes despite the lenders earlier expressing their disapproval to part conversion of loans to equities as it would hurt their commercial interests.
In April, the Finance Ministry had warned banks, especially those run by it, against the increasing tendency of lenders to convert a significant part of loans into equity instruments, such as cumulative convertible preference shares in a CDR scheme.
The ministry objected to this tendency as it felt that such equity instruments are like a grant to the promoters as no dividend accrues on such shares until the company becomes profitable.
Sources claimed it has an order book of at Rs 6,500 crore as of April, which will keep it occupied up to March 14.
Following the global economic slowdown, and an untimed takeover of Great Offshore in the middle of the slowdown in December 2009, Bharati Shipyard saw its debt soaring to Rs 3,861 crore as of FY12, from Rs 3,037 crore in FY11.
In the March quarter, Bharati Shipyard reported a net loss of Rs 36.5 crore, while for the full fiscal its net plunged 94 percent to Rs 5.95 crore against Rs 113 crore a year ago. Its net sales fell by 20 percent during the fiscal to Rs 1,102 crore, while interest burden surged 84 percent to Rs 490 crore.
The Bharati Shipyard stock closed 3.15 percent down to Rs 61.50 on the BSE, whose main gauge plunged 253 points, or 1.56 percent, on Friday.