Vishal Retail admitted for CDR, details to be worked on

Delhi-based Vishal Retail’s Rs 730 crore of loans will be restructured, its bankers agreed today. It has become the second major retailer after Subhiksha to go into a corporate debt restructuring (CDR) process after it said it couldn’t pay its loans.

State Bank of India (SBI), the lead lender, with an exposure of Rs 170 crore to Vishal, gave a report to the CDR cell, with a tentative plan for a recast. According to CDR norms, the entire process has to be completed within 120 days.

The CDR cell, chiefly bankers, will examine if the default is due to reasons beyond the control of the company, such as economic slowdown, or a wilful default. For 120 days, no CDR member can take a unilateral action against the company, the bankers said.

According to sources, Vishal is seeking a moratorium on payment of both the interest and principal amount it owes to lenders. The details are to be worked out. The company has an annual interest payment obligation of Rs 100 crore.

Vishal owes Rs 730 crore to banks such as SBI, HDFC, HSBC and UCO Bank, and to LIC, among others.

The promoters would probably also have to bring in additional equity, for which a strategic investor may be brought on board. They would also have to pledge his holding in the company with lenders, sources said. The promoters have around 62.3 per cent stake in the company.

Vishal Retail group president Ambeek Khemka was not available for comment. However, he told a TV channel that, “Lenders are very sure that the company will be in a position to service its debt. However, there would be some kind of sacrifices which the lenders might have to make. The company would have to ensure that the business is running by bringing down the financial cost.”