Debt-laden ABG Shipyard has got a Rs.2,100-crore lifeline from 22 commercial banks which have agreed to recast their loans under a Corporate Debt Restructuring (CDR) process to revive the ailing company.
The Rs.11,000-crore CDR includes restructuring of loans to the tune of around Rs.9,000 crore and fresh advances of Rs.1,800 crore as working capital loan and another Rs.300 crore as term loan to ABG Shipyard, the company’s Chief Financial Officer Dhananjay Datar told The Hindu .
“We have got two years of moratorium for interest payment. And after that period, we have to repay the loan in eight years. The interest rate has been reduced from 13.5 per cent to 11 per cent per annum. This is a big relief for us,” Mr. Datar said.
ADVERTISEMENT
“Of the around Rs.9,000-crore loan, Rs.2,000 crore was long-term loan. The balance was for working capital. For two-and-half years, we had been pleading with lenders to advance us Rs.1,800 crore more towards working capital loan as we had order book of Rs.18,000 crore. But we did not get any money,” Mr. Datar said.
“This had affected our operations, and we could not deliver ships as per schedule. Many customers cancelled orders, and asked for refund of initial payment,” he added.
“Now that fresh working capital loan has been sanctioned, we will start working on the under-construction ships and complete the delivery of ships in two to three years. This will enable us to pay back loans of around Rs.4,000 crore,” Mr. Datar added.
ADVERTISEMENT
The company had 44 ships under construction, he said. The lenders would monitor the progress of the ship-building activity, he added.
The consortium of banks, led by State Bank of India, has reportedly agreed to sacrifice Rs.900 crore, and the promoters have been asked to contribute Rs.230 crore.