Lanco Infratech Lenders To File Insolvency Case With NCLT
Lanco Infratech to be sent to NCLT for insolvency.
Lenders of Lanco Infratech Ltd. will admit the company to the National Company Law Tribunal (NCLT) for insolvency and bankruptcy proceedings, two bankers with direct knowledge of the matter told BloombergQuint.
The decision was taken at a meeting held in Mumbai on Monday, the bankers confirmed, adding that the case will be sent for admission in the next two to three weeks. The consortium of lenders to Lanco Infratech is made up of 27 lenders led by IDBI Bank. The bank told BloombergQuint over the phone that it will not respond to client specific queries.
The decision followed a directive from the Reserve Bank of India (RBI), where the regulator had identified 12 cases for immediate action under the insolvency and bankruptcy code. A list of these companies was sent to some large bankers, including State Bank of India (SBI), who have called for JLF meetings through this week, bankers BloombergQuint spoke to said on the condition of anonymity.
Lanco Infratech’s financial performance had been impacted owing to challenges facing the power and infrastructure sectors, the company had said in its annual report for the year 2015-16.
The company reported a net loss of Rs 813 crore for the quarter ended December 31, 2016, as compared with a net profit of Rs 352 crore a year ago. The company has been trying to sell its assets as a way to reduce debt, however, it has been largely unsuccessful. In financial 2014-15, the company had managed to sell a 1200MW coal-based power plant in Udipi, to Adani Power Ltd.
In July 2015, bankers to the company had invoked the strategic debt restructuring (SDR) scheme in Lanco Teesta Hydropower Ltd to convert debt to equity and recover their exposure through a sale. However, lenders are yet to make any headway in this sale.
Last year, it was also reported that Lanco Infratech would be bundling all of its power assets in to a special purpose vehicle (SPV), which would then be sold to an investor, to reduce the burden.
In a note to the stock exchanges, on Saturday, the infrastructure company said IDBI Bank would be invoking the insolvency and bankruptcy code under the Corporate Insolvency Resolution Process (CIRP), as directed by the RBI.
The amounts mentioned in above referred letter shall be read as Rs 8,146 crore for fund based outstanding exposure and Rs.3,221 crore for non-fund based outstanding exposure as on March 31, 2016.Lanco Infratech Filing To Exchanges
Lanco Infratech is one of the 12 cases which are set to go through a financial resolution process under the insolvency and bankruptcy code, after being identified by an independent advisory committee of the RBI.
The other companies on the RBI’s list include Essar Steel Ltd, Bhushan Steel Ltd, Bhushan Power & Steel Ltd, Monnet Ispat & Energy Ltd, Era Infra Engineering Ltd, ABG Shipyard Ltd, Amtek Auto Ltd, Alok Industries Ltd, Jyoti Structures Ltd and Jaypee Infratech Ltd., Electrosteel Steels Ltd., bankers had earlier told BloombergQuint.