ABG Shipyard to recast long-term debts

ICICI Bank, SBI, IDBI, Bank of India, Bank of Baroda and Punjab National Bank are among major lenders to ship-building company

ABG Shipyard Ltd, Mumbai-based shipbuilding company, is in the process of restructuring its long-term debts.

An official of the company confirmed the move but refused to divulge details.

A senior executive with public sector bank said, “The reference (to corporate debt restructuring)  has been made recently. The sector is passing through a bad patch due to economic slowdown.”

According to the last annual report of the company, ICICI Bank, State Bank of India, IDBI, Bank of India, Bank of Baroda and Punjab National Bank are among the major lenders to the shipbuilding company.

Bharati Shipyard, which too has been facing rough weather on account of dwindling revenues, is also planning to recast its Rs 5,860-crore debt.

The company has been facing liquidity issues since 2011 and global recession has dealt a severe blow, as almost 70% of its customers are Europeans.

Last month, India Ratings & Research, a rating agency, downgraded ABG Shipyard's Rs 200-crore non-convertible debenture programme to default from 'IND BB' earlier, citing delayed payments. A year ago, the Rs 200-crore non-convertible debenture programme was rated ‘A-’ by the agency.

The agency has also downgraded ABG Shipyard's long-term issuer rating to 'IND D'.

“The downgrade reflects its delay in repayments pertaining to the Rs 200-crore non-convertible debenture programme,” said the agency.

ABG Shipyard had been experiencing tight liquidity, triggered by delays in receiving milestone-linked payments from clients, for the past one year.

IN TROUBLED WATERS
What is driving ABG to CDR

• Liquidity strain
• Falling financial profile
• Erosion in profitability due to unfriendly business climate