Cash-strapped infrastructure company IVRCL Ltd has decided to split its engineering procurement construction (EPC) and assets business – land and build operate transfer (BOT) – into two separate companies, to find equity investors for its EPC business, as per a stock market disclosure.
In a meeting held on December 19, 2015, the board of directors approved the scheme, which is now subject to receipt of no-objection letter from the lenders/Joint Lenders Forum, approval of High Court of Andhra Pradesh and Telangana and other approvals as may be required.
The board has also approved the conversion of part of the debt into equity shares of the company followed by the invocation of strategic debt restructuring (SDR) by Joint Lenders Forum, the company said in the disclosure.
Last month, the lenders had invoked SDR norms and decided to take over the company by converting their debt into controlling equity.
Under the norms, lenders of a company can convert loans into a majority stake and management control under the Reserve Bank of India’s SDR guidelines, announced in June this year.
Besides, the lenders can hold the controlling stake for around 18 months and subsequently sell the assets or find a new management for the company.
The lenders of IVRCL already hold a 43.88 per cent stake in the company as they kept converting the interest portion of the accumulated debt into equity from time to time under the corporate debt restructuring (CDR) mechanism.
Last year in July, a group of 20 lenders cleared debt revamp package worth Rs 7,500 crore for IVRCL through the CDR Cell.
The firm’s promoters own just 8.28 per cent equity stake.