Vishal lenders near agreement on restructuring

The lenders of Vishal Retail, finalising agreement on a restructuring package in which a strategic investor would be brought in and the company delisted after its liabilities are cleared, also want relisting in the next five years, said a banker familiar with the developments.

The plan is that lenders would hold stake in the company as part of the package and recoup their investments once it is re-listed after being put back on its feet. They may opt to sell their stakes at that point, said the banker.

The lenders had already given approval for the company to bring in the said strategic investor. As already reported, it is likely to pave the way for entry of the Texas Pacific Group (TGP), a private equity investor which had put in a bid for Vishal.

TPG has planned to convert Vishal into two entities, a cash and carry (wholesale) venture and a retail venture wherein TPG’s Indian associate would invest.

The bankers’ entire exposure to the company would not be converted into equity. There would be a combination of repayment and the equity stake, the banker said. Vishal owes nearly Rs 730 crore to its lenders. It has assets of Rs 75 crore and liabilities of Rs 50 crore.

The banker said all the lenders would keep a close eye on TPG, as it did not have prior experience in running a retail entity.

“A proposal has been given by TPG under the CDR mechanism and the process is yet not over. Hence, we would restrict our comments,” Ram Chandra Agarwal, chairman and managing director of Vishal said in an emailed response. He owns 62 per cent in the company.

The banker also said the lenders were willing to accept a two-year moratorium on repayment to lenders. “We are taking a calculated risk in the best interests of all,” he said.

On this, Agarwal said: “A moratorium will help the company reduce interest burden initially, stabilise its operations and bring it back on track.”