A consortium of lenders of Mumbai-headquartered engineering and construction company Gammon India Ltd has decided to convert part of the company's Rs 15,000 crore debt into equity by invoking strategic debt restructuring (SDR) rules, as per a stock market disclosure.
“The corporate debt restructuring empowered group (CDR EG) in its meeting held on November 23, 2015 discussed the invocation of SDR in the company by CDR lenders,” Gammon India said in a statement to the stock exchanges on Monday.
As per the SDR norms announced by the Reserve Bank of India (RBI) on 8 June, banks can convert their debt into majority equity in the company if they feel the need to change management.
The move by the lenders of Gammon came at a time when the company has been restructuring its nearly Rs 15,000 crore of debt through CDR since September 2013. As part of this exercise, it is selling assets to repay debt.
This is one of the largest debt restructuring packages approved by lenders in the past two years.
Previously, lenders of Electrosteel Steels Ltd, Lanco Teesta Hydro Power Pvt. Ltd, VISA Steel Ltd, Jyoti Structures Ltd and Monnet Ispat and Energy Ltd also invoked SDR norms.
Recently, the company announced to transfer its civil engineering, procurement and construction (civil EPC) business to its subsidiary Gammon Retail Infrastructure Pvt Ltd so as to raise capital for the civil EPC business, which includes roads, hydropower and nuclear power projects, tunnels, bridges, buildings and cooling towers.
The company has transferred these projects along with all the properties, rights and powers and all debts, liabilities, duties and obligations to Gammon Retail Infrastructure.
Last month, Gammon also agreed to sell a 75 per cent stake in Transrail Lighting Ltd, which houses its tower and conductor manufacturing business, to financial information services provider Bilav Software Pvt Ltd.
The transfer of T&D Undertaking by way of slump sale was in line with the company’s strategy to consolidate the entire T&D business of Gammon India to Transrail Lighting to enable investments by strategic investors.
In August, Gammon India unit Gammon Infrastructure Projects Ltd agreed to divest nine road and power projects to funds managed by global asset manager Brookfield and an infrastructure fund run by Kotak Private Equity.
Founded in 1922, Gammon India operates in three segments—construction and engineering, oil exploration and realty development.