In bid to avoid red-ink on bank balance sheet for third quarter, lenders to Suzlon Energy have advanced the meeting to finalise debt recast package on December 31.
Suzlon is still a treated as standard account. With payments due for close to 90 days, Suzlon account would have to be downgraded to non-performing asset category on close of business at end of December.
Initially, lenders were scheduled to firm up package, for loan over Rs 10,000 crore, in second week of January 2013 said a senior public sector executive said.
So if debt was recast in January 2012, banks would have had to treat it as NPA and make provisions in line with regulatory norms
Once account slips into NPA category. It would carry NPA status even if it was restructured. Any up-gradation could be done only after one year on the basis of performance review. So this would have added to provision burden all through.
Another PSB official said “By recasting it in third quarter, bank will save Suzlon from NPA tag and also subsequent huge provisioning burden”. Bankers can review account for up gradation only after one year.
The draft restructuring package for Tulsi Tanti-controlled company includes interest rate concession, 2 year payment moratorium, extended repayment period and fresh working capital support.
The estimated hit the banks will take on account of reduction in interest rate for revised package is Rs 1,000 crore. The draft package involves promoters pumping in about Rs 250 crore. This may partly mitigate the sacrifice lender’s make.
In October, Suzlon defaulted on redemption of foreign currency convertible bonds worth $220 million, after bond holders rejected a request for extension.
