The lenders to debt-laden Infrastructure Leasing & Financial Services (IL&FS) have signed binding term sheets to restructure debt worth Rs 5,071 crore of three group companies — Moradabad Bareilly Expressway, Jharkhand Road Projects Implementation Company and West Gujarat Expressway Limited.
The companies will now be moved to the green category from amber, in line with the directions of the National Company Law Appellate Tribunal (NCLAT) and thus will be able to service their debts to all secured and unsecured lenders. The new board of IL&FS had classified the group companies into three categories — green, amber and red.
The firms under the green category are those still operating with a positive net worth and have enough cash flows to meet their one-year payment obligations to all creditors.
Those under the red category are not in a position to repay even secured creditors, while firms under the amber category have cash flow for payment to secured creditors, but not enough to meet the claims of unsecured creditors.
According to the binding term sheet, which involves a revised proposal for debt-restructuring, there will be certain concessions and modification of terms of financial debt availed by these entities from lenders. This includes release of cash flow from existing accounts to service financial and operational creditors, a reduction in debt service coverage ratio requirement, and a revision in interest rate charged to the entity, the counsel for the new board of IL&FS told the NCLAT on Thursday.
So far, the board has classified 150 entities into green (55), red (82) and amber (13). The IL&FS group has 302 entities, of which 169 are in India and the rest are overseas. The collective debt of the green entities, according to the fifth progress report, was more than Rs 11,000 crore. The amber and red entities have a debt of Rs 16,372 crore and Rs 61,375 crore, respectively.
A plan to further reclassify another nine firms in the amber category is in the works.
In some of these cases, there have been problems where lenders have not come to an agreement either on the extent of haircut, or on the reduction in interest rate. Some lenders have also raised objections to the repayment schedule proposed in the plan, the counsel informed NCLAT.