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| Vishal promoter to exit in debt recast |
| BS Reporter / Mumbai Nov 01, 2009, 00:55 IST |
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Value retailer Vishal Retail's founder chairman and managing director, Ram Chandra Agarwal, will step down, according to a settlement reached with the company’s lenders. The company today decided to go for corporate debt restructuring. Agarwal owns 62 per cent of the company.
Vishal's creditors have said that Agarwal should step down and the company should bring in a strategic investor to infuse funds to reduce the debt of Rs 730 crore on its books. The new investor is likely to have a say in the operations of the company.
State Bank of India is the largest lender (Rs 170 crore) to the company. Others are HSBC, HDFC, Barclays, Uco Bank, Life Insurance Corporation and Deutsche Bank.
The company posted a net loss of Rs 90 crore for the quarter ended June 2009. This came after it had reported a loss of Rs 94 crore for 2008-09. The company's stock has shed 14 per cent in the last one month.
"It is natural that Agarwal will step down as a part of the restructuring. It is up to the bankers and investors to decide the future course of action,'' a company executive said.
Vishal Retail's board today initiated steps towards the restructuring by agreeing to sign the debtor-creditor agreement. "The decision has been taken by consensus. With the restructuring, the fortunes of the company will change for the better. We will do whatever it takes for the betterment of the company and in the interests of 10,000 families and so many vendors,'' Ambeek Khemka, group president, Vishal Retail, had said on Wednesday.
The company is expecting that the corporate debt restructuring cell in Mumbai will admit Vishal's case in the third week of November and the whole process to get completed in two to three months.
The company's board also gave its consent for allotment of 3.91 million warrants convertible into equity shares to Agarwal.
After its successful public issue in 2007, Vishal had expanded rapidly in the last two years. But with the prolonged economic slowdown since mid-last year, retailers such as Vishal have struggled with dwindling revenues and huge inventory costs.
Chennai-based Subhiksha went for corporate debt restructuring early this year. The retailer missed the deadline of July 31 to complete the process. Some of Subhiksha's creditors have mooted the proposal to wind up the company.
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