Delhi HC freezes Shiv-Vani Oil's bank accounts, assets

Interim relief in a petition filed by FCCB holders against the firm's debt rejig move

The high court here has restrained onshore rig owner-cum-operator Shiv-Vani Oil and Gas Exploration Services from operating its bank accounts, creating any charge or otherwise disposing of the company’s assets. The court also restrained the company and its directors from “finalising or implementing any CDR (corporate debt restructuring) scheme”. The directions were laid down in a winding-up petition moved by Citicorp international on behalf of the holders of the company’s foreign currency convertible bonds (FCCB).

The company has raised FCCB worth $80 million, maturing in August 2015.

Several public and private sector lenders have lent to Shiv-Vani for the purchase of equipment, as well as for other capital expenditure. These lenders include ICICI Bank, State Bank of India, Punjab National Bank, YES Bank, Corporation Bank and IFCI.

On July 1, Shiv-Vani had informed the exchanges that it had initiated discussions with lenders on CDR mechanism and had, accordingly, filed a report with the CDR cell, Mumbai, on June 28. “The restructuring of debts will result in an improvement in the liquidity of the company and strengthen its core operations, which would lead to value addition of the stakeholders in the long term,” the company had said.

But the FCCB holders expressed apprehension that “once the CDR scheme is implemented, it cannot take care of the petitioner, who is an unsecured creditor”.

Shiv-Vani had a healthy business relationship with Oil and Natural Gas Corporation. It had also attracted capital from top institutional investors such as Templeton, Citi Ventures and Reliance Capital. A total of 57 promoter group entities, led by brothers Prem and Padam Singhee, own 49.38 per cent in the company. As the debts mount, about 85 per cent of the shares held by the promoter group are pledged with lenders.

Through several months, Shiv-Vani has been facing trouble on multiple fronts; lenders say it hasn’t done enough to overcome the hurdles. While the business outlook turned grim following lower government spending, several operational issues emerged, as the company found it difficult to service high-cost debt. Investor circles said the company had initially benefited from association with the brass of some public sector firms whose contracts it was executing, and suffered when the ties snapped.

In January this year, the Central Board of Excise and Customs had registered a case of service tax evasion of Rs 200 crore against the company. Reports said the firm hadn’t filed service tax returns since October 2010. The company agreed to the liability, citing “financial constraints” for non-payment. On Tuesday, the Shiv-Vani stock gained 4.8 per cent to close at Rs 10.9 on the BSE.