Lenders clear debt recast package for Educomp arm

Packages still in works for parent company and Core Projects

Lenders agreed to restructure Educomp Infrastructure & School Management’s Rs 727-crore debt in November. They have also decided to convert debentures of Rs 105 crore of the subsidiary of Educomp Solutions into term corporate credit. Senior public sector bank executives said a package for the parent company was still being discussed.

The package would entail the promoters contributing Rs 34 crore upfront. The payment holiday for interest is till 2016. Bankers would have to sacrifice Rs 125 crore.

The company management did not comment on the restructuring. However, in response to emails on the company's growth, Shantanu Prakash, Educomp Solutions chairman and managing director, said they had changed the business model of their flagship Smartclass programme from outright to build-own-operate from April 1, where the revenue would be recognised over the entire contract period (20 per cent of order book annually).

Educomp Solutions posted a net loss of Rs 83 crore for the quarter ended September, against a net profit of Rs 4 crore in the year-ago period.

Consolidation phase

Prakash said the sector was going through a phase of consolidation. "We are hopeful that FY15 will ease a lot of the pain in the system and with a new government in place in mid-2014, the economy as a whole and the education sector in particular will get a fillip," he said.

The going has been tough for other companies in the education business, too. Everonn Education reported standalone sales of Rs 11 crore and net loss of Rs 23 crore for the quarter ended September.

In August 2012, Everonn, part of the Dubai-based Sunny Varkey group, had said it planned to acquire Centum Learning in an undisclosed cash-and-stock deal to expand its reach in India. However, in February, Everonn cancelled the plan.

 

Core Education & Technologies registered a net loss of Rs 29 crore for the quarter, against a net profit of Rs 73 crore in the year-ago period. The company saw liquidity tighten and had to seek Rs 200 crore in new loans in August, as part of debt restructuring. The company has already been to the corporate debt restructuring cell to rework payments for half of its Rs 1,300-crore loans and is trying to get the remaining debt recast.