New Delhi: Discount retailer Subhiksha Trading Services Ltd, which closed stores after it ran out of cash, is confident its debt recast will be completed well before the end of next month after negotiations with stakeholders.
“The contours of the revival plan of the company have been agreed,” R. Subramanian, founder of Chennai-based Subhiksha, said in an emailed statement late on Thursday. “The entire revival will be equity financed so as to put the company on a sound footing.”
The debt restructuring of the company, key to the survival of the retail chain, has to be completed by 31 July, or six months since the beginning of the process. Subhiksha, which owes 13 banks about Rs8 billion ($165 million), said 12 of the banks and the company’s three largest stockholders are working to restructure the debt and infuse funds needed for the company to reopen its stores, Subramanian said.
Kotak Mahindra Bank Ltd, one of Subhiksha’s smallest lenders, has approached the courts, he said.
Subhiksha on 30 January said its business was at a near standstill and it needs Rs3 billion to resume operations.
The retailer, founded in 1997, ran out of cash in October after relying on a high level of debt, according to the company.
The corporate debt restructuring cell, a voluntary organization backed by the Reserve Bank of India that assists lenders and borrowers, began working on recasting Subhiksha’s debt on 31 January.
Billionaire Azim Premji, who owns a stake in Subhiksha, has sent a legal notice to the retailer’s directors for allegedly failing to perform their duties, The Economic Times reported on Friday, without saying where it obtained the information.