Mumbai: A group of lenders has approved a plan to recast the debt of Maytas Infra Ltd, promoted by family members of B. Ramalinga Raju, the founder of fraud-hit Satyam Computer Services Ltd. These lenders have a combined exposure of Rs3,037 crore to the infrastructure firm.
As part of the recast, approved on 30 June, select banks will take on an additional Rs400 crore of so-called fund- and non-fund-based exposure to the company, according to several bankers involved in the debt restructuring.
Fund-based exposure means lending in cash.
Non-fund exposure signifies credit facilities extended by banks in which no actual lending is involved.
A credit guarantee is one example of non-fund-based exposure, in which the bank pays if a company defaults.
“Banks’ total exposure to the troubled company is to the tune of Rs3,037 crore of which fund-based exposure is Rs1,730 crore, of which Rs269 crore will continue as working capital facility,” said a public sector bank official who is a member of the corporate debt restructuring (CDR) mechanism.
Non-fund-based exposure is around Rs1,307 crore, said the banker, who didn’t want to be named.
Maytas Infra was promoted by B. Teja Raju, the eldest son of B. Ramalinga Raju. In January, after Ramalinga Raju confessed to cooking Satyam’s books to the tune of at least Rs7,136 crore over a period of several years, Maytas Infra also came under the regulatory scanner.
The Company Law Board (CLB) in March appointed four government nominees to run the company, and K. Ramalingam, former chairman of the Airports Authority of India, was appointed chairman.
The government nominees have negotiated the CDR proposal. Teja Raju, vice-chairman of the company, continues to be on the board. Satyam Computers has since been sold to Tech Mahindra Ltd and renamed Mahindra Satyam.
“According to the corporate debt restructuring scheme, the banks have decided to convert the fund-based exposure of around Rs1,461 crore into a long-term loan. Banks have given the company a moratorium of two-and-a-half years on the exposure and extended the tenure of the loan to seven years,” said a banker with knowledge of the development.
“So now, the company can pay the loan over a period of nine-and-a-half years,” added the banker, who also didn’t want to be named.
A moratorium is a temporary suspension of payment extended by lenders to a borrower.
The interest payable during the moratorium of two-and-a-half years will also be converted into a term loan, said a senior Axis Bank official who is also a CDR member, and who requested anonymity.
The public sector bank official mentioned earlier said that select banks had decided to take an additional exposure of Rs400 crore “which will be equally split as fund-based and non-fund-based exposure”.
A group of 19 banks, including the country’s largest bank State Bank of India (SBI), are part of the CDR. SBI and its closest rival ICICI Bank Ltd, have an exposure of around Rs290 crore and Rs800 crore, respectively.
A public sector bank official who is a member of CDR said that the lenders had not given Maytas Infra any concession on the interest rate charged on the loan. The interest rate on the loan is between 11% and 13%. This official, too, declined to be named.
The CDR mechanism is meant for speedy disposal of restructuring proposals by large borrowers availing financing from more than one bank or financial institution. It is extended to borrowers who have total fund-based and non-fund-based liabilities of at least Rs10 crore.