ABG Shipyard sails out of troubled waters with Rs 11K-cr CDR

With ABG Shipyard deal, total loan recast in FY 2014 has sniffed at a whopping Rs 1 trillion

The troubled ABG Shipyard has got a fresh lease of life with the 22-lender consortium clearing a Rs 11,000-crore corporate debt restructuring (CDR) proposal, which includes a fresh working capital loan of Rs 1,800 crore.

This is the second largest CDR package in the history of India's banking sector. The largest CDR package was cleared in July, 2013 for the engineering and construction major Gammon India when its Rs 13,500-crore loan was rescheduled for a 10-year tenor at lower interest rate.

With the ABG Shipyard deal, the total loan recast in FY 2014 has sniffed at a whopping Rs 1 trillion, taking the overall CDR book of banking system well past Rs 3.7 trillion.

Both leading lenders and the company confirmed the development.

"At the March 24th meeting of the CDR cell, the lenders have cleared our proposal to recast Rs 11,000 crore of our loans. With this package, our effective interest rate will be 11%, as against 13.5% now.

"The package includes a two-year moratorium on interest payment apart from a fresh working capital loan of Rs 1,800 crore. The is rescheduled for eight years now," ABG Shipyard Chief Financial Officer Dhananjay Dattar told PTI.

The troubled Surat-based shipbuilder, which moved the CDR cell last November, has a debt of Rs 11,500 crore on its books. This includes Rs 2,000 crore of term loans, Rs 7,700 crore of working capital loans and Rs 1,800 crore of fresh working capital loan extended by the consortium led by ICICI Bank, Dattar said.

The deal got delayed as lenders were not satisfied with the guarantees the promoters were offering as also their inability to bring in fresh capital of Rs 300 crore.

When contacted an official of State Bank of India, which has an exposure of Rs 1,600 crore to the largest private sector ship-builder in the country, confirmed the CDR deal but did not offer details.

Dattar said the promoters, including Chairman Rishi Agarwal, who holds close to 67% stake in ABG Shipyard, have pumped in Rs 230 crore into the company for the deal to go through.