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Photo Credit: Courtesy: IVRCL

Lenders to take control of debt-ridden IVRCL through SDR route

02 December, 2015

Lenders of cash-strapped infrastructure company IVRCL Ltd have decided to convert loans worth Rs 7,500 crore to a majority equity holding, in a move that would set the stage for a change in management control.

A meeting of key lenders will be held to decide the way forward, a statement said. 

It may be noted that lenders of a company can convert loans into a majority stake and management control under the Reserve Bank of India’s strategic debt restructuring (SDR) guidelines, announced in June this year.

With this, IVRCL has become the latest debt-laden company to be taken over by lenders. Recently, lenders of Gammon India and Monnet Ispat also invoked SDR norms and decided to take over the two companies by converting their debt into controlling equity.

Previously, lenders of Electrosteel Steels Ltd, Lanco Teesta Hydro Power Pvt Ltd, VISA Steel Ltd and Jyoti Structures Ltd also invoked SDR norms. 

If the SDR norms are invoked for IVRCL’s entire debt, it may become the largest case where lenders will be taking control of a company’s operations.

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. 

The firm’s promoters own just 8.28 per cent equity stake.

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.

Last year in July, a group of 20 lenders cleared debt revamp package worth Rs 7,500 crore for IVRCL through the CDR Cell.


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Lenders to take control of debt-ridden IVRCL through SDR route

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