Creditors okays debt recast plan of Renuka Sugar's Brazil arm

Leading sugar firm Renuka Sugars today said the creditors has approved debt restructuring plan of its Brazilian subsidiary Renuka do Brasil (RdB), which will have to sell one plant for settlement of dues.
At present, RdB has a liabilities including bank debt of about Rs 4,700 crore and the same would get reduced by about Rs 3,300 crore.
In a filing to BSE, the company informed "under the Judicial Protection Law..., the assembly of creditors of Renuka do Brasil S/A (RdB) has approved the reorganization plan". RdB had presented the plan on August 26.
Under the debt restructuring plan, the banks and most of the creditors of RdB (except employees, suppliers of sugarcane and other essentials and small and medium enterprises), are obliged to settle their debts on receiving 30 per cent of the notified value of debt plus interest from the date of plan approval until the date of payment, it added.

Total bank debt in RdB was BRL 2,063 million (Rs 43,014 million), while other liabilities covered under the plan are BRL 210.8 million (Rs 4,395 million), implying total reduction of liabilities by BRL 1,592 million (Rs 33,186 million).
"The settlement of the debt would be funded by sale of one of the mills of RdB (Madhu Mill) with a capacity of six million tonnes cane crushing capacity out of total 10.5 million tonnes cane crushing capacity in Renuka do Brasil," the filing said.

The mills would be sold as an "independent production unit" protected by the law from residual liabilities and contingencies.

"Employee, sugarcane and other essential suppliers and SME suppliers will be paid from the operating cash flow of RdB over the next 12 months except of BRL 41.78 million (Rs 871 million), which will come from the sale of Madhu mill," the filing said.
Renuka Sugars is not putting any new capital under this plan either as debt or equity.
However, it said that any shortfall in reaching the target value of 30 per cent (about BRL 682.2 million or Rs 14,223 million) will have to funded by the shareholders of RdB in cash or sale of Renuka Sugars' controlling stake in RdB.

A new CEO would be inducted by the RdB board to oversee the separation of the two mills and the sale process of Madhu Mill.
Renuka Sugars hold 59.4 per cent stake in RdB. It had acquired this company in July 2010. RdB owns two large sugar mills with an aggregate cane crushing capacity of 10.5 million tonnes per annum.
Meanwhile, the debt restructuring plan of Renuka Sugars' other Brazillian subsidiary Renuka Vale do Ivai was approved last month.
Mumbai-based Renuka Sugars had in 2010 forayed into Brazil, the worlds largest sugar producer, by investing Rs 1,765.10 crore to acquire stakes in two companies.