http://www.livemint.com/Companies/JjoO2QIiFyOUZqnQolymAL/Gammon-India-lenders-to-take-control-of-company.html
“If lenders had not taken a decision to go for SDR, the account could have turned into default status. Moreover, RBI has given a provision to invoke the norms in cases where CDR is still going on. So the consortium felt that this was the best way forward,” a banker from the CDR cell said on conditions of anonymity.
“The conversion of debt to equity is only a balance sheet activity. It wouldn’t mean anything if the bankers are not able to find a suitable buyer. The focus of invoking SDR should be to find a buyer who can bring material change in the company and thereby create value, rather than some changes in asset classification,” said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services LLP.
Project delays caused by issues related to land acquisition and government clearances in recent years have constrained corporate cash flows and made it difficult for borrowers to repay debt. Energy, commodity and infrastructure companies have borne the brunt, leaving lenders with a large pile of non-performing assets.
Gammon India has been restructuring its nearly Rs.15,000 crore of debt through the CDR mechanism since September 2013.
As part of the corporate debt restructuring package, Gammon’s 19-lender consortium, led by ICICI Bank Ltd, agreed to divide the company into three parts, a second banker said on conditions of anonymity because he isn’t allowed to speak to the media.
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