Lenders Invoke Strategic Debt Restructuring For HCC’s Lavasa Project
Lenders invoked the SDR scheme for Lavasa after delays in enforcing a previously agreed upon restructuring plan
Infrastructure developer Hindustan Construction Company Ltd. (HCC) on Thursday informed stock exchanges that lenders had decided to invoke the Strategic Debt Restructuring (SDR) scheme for its Lavasa township project. Using the scheme, lenders will convert debt into a majority equity holding in the unit.
In the joint lenders’ forum meeting of the lenders of Lavasa Corporation Ltd. held on 20th September 2017, the lenders have decided to invoke Strategic Debt Restructuring with reference date of 20th September 2017. As part of a comprehensive solution, the SDR has been invoked in Lavasa Corporation Limited and its wholly owned subsidiaries - Warasgaon Assets Maintenance Ltd and Warasgaon Power Supply Ltd.HCC Notification To Stock Exchanges
The invocation of the SDR scheme, which can potentially lead to the promoters losing control of the Lavasa unit, comes after a delay in finalising a previously announced restructuring plan.
In May, BloombergQuint reported based on information from bankers, that nearly Rs 3,500 crore in Lavasa debt would be restructured under the Reserve Bank of India’s flexible structuring of long term loans.
The plan, however, appears to have been delayed. In its notification to exchanges on Thursday, HCC said that lenders had taken note of this delay and decided to invoke the SDR scheme.
The lenders took note of the fact that due to delay in implementation of earlier JLF approved structure, the project remained stalled for 2 years and an additional interest of around Rs 1,200 crore was accumulated and hence release of working capital for the project needs to be resolved on priority.HCC Notification To Stock Exchanges
According to financial information available on Lavasa Corporation’s website, the company reported a loss of Rs 166 crore for the year-ended March 31, 2017, as compared with a profit of Rs 269 crore in the previous year. Total income fell 39 percent to Rs 609.5 crore year-on-year. HCC has been attempting an initial public offering of Lavasa Corporation since November 2010, but has been unsuccessful so far.
Along with the Lavasa unit, the parent company HCC too is in the process of restructuring its loans under the Scheme For Sustainable Structuring of Stressed Assets (S4A). In November, the company informed stock exchanges that the RBI mandated overseeing committee has cleared the company’s restructuring plan under the scheme.