Shree Renuka Sugars gains after reorganization of Brazil arm approved

The stock was up 5.6% at Rs 16.90 on the BSE, as compared to 0.14% decline in the S&P BSE Sensex at 10:41 am.

Shree Renuka Sugars has rallied 8% to Rs 17.35 on the BSE after the  Assembly of Creditors of Renuka do Brasil S/A (RdB) approved the Reorganization Plan presented by Renuka do Brasil S/A on August 26, 2016. Renuka do Brasil is the largest subsidiary of Shree Renuka Sugars.

The plan approved by the Assembly of Creditors obliges the banks and most of the creditors of RdB (except employees, sugarcane & other essential suppliers and SME suppliers) to settle their debts on receiving 30% of the notified value of debt plus interest from the date of plan approval until the date of payment.

The total bank debt in Renuka do Brasil notified as on the date of filing the Recuperacao Judicial (September 28, 2015) was BRL 2,063 million (Rs 4,301 crore) and other liabilities covered by the above plan are BRL 210.8 million (Rs 440 crore) implying total reduction of liabilities by BRL 1,592 million (Rs 3,319 crore).

The settlement of debt would be funded by sale of one of the mills of RdB (Madhu Mill) with the capacity of 6 million mt cane crushing capacity out of total 10.5 million mt cane crushing capacity in RdB.

Shree Renuka Sugars is not putting any new capital under this plan either as debt or equity. However any shortfall in reaching the target value of 30% (approximately BRL 682.2 million or Rs 1,422 crore) will have to be funded by the shareholders of RdB in cash or by sale of Shree Renuka Sugars controlling stake in RdB, the company said in a press release.

This plan is subject to final approval by the presiding judge as per the Judicial Protection Law, it added.

At 10:41 am, the stock was up 5.6% at Rs 16.90 on the BSE, as compared to 0.14% decline in the S&P BSE Sensex. A combined 9.63 million shares changed hands on the counter on the BSE and NSE.