Reliance Defence gets banks approval to exit CDR package
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New Delhi: Reliance Defence and Engineering Ltd has secured nod from a consortium of lenders to exit its corporate debt restructuring (CDR) package. The consortium of lenders, led by IDBI Bank Ltd, has agreed to the exit plan of Reliance Defence, a subsidiary of Reliance Infrastructure, with a longer maturity period for loans worth about Rs6,800 crore, people aware of the matter said.
The lenders have also given their go-ahead to implementation of refinancing scheme of Reliance Defence. Both the proposals were presented to the CDR Empowered Group’s (EG) meeting on 29 March and approved by the requisite majority of CDR lenders. Reliance Infrastructure refused to comment.
IDBI has confirmed to the Ministry of Defence the approval granted by the EG to the CDR exit plan and refinancing scheme. According to the people quoted above, the confirmation from IDBI makes Reliance Defence eligible for participating in all future contracts of the Navy. Now, Reliance Defence and Larsen and Toubro Ltd are the only two private sector shipyards that will compete with government-owned shipyards for prestigious contracts for making submarines, landing platform dock (LPD) and corvette.
As per the refinancing scheme approved by the Empowered Group, about Rs6,800 crore of Reliance Defence debt will be refinanced with maturity of about 20 years and lower interest rate. Exiting CDR is also expected to provide increased financial manoeuvring to the company. Reliance Infrastructure has increased its shareholding in Reliance Defence to nearly 31%. Reliance Defence’s current order stands at over Rs5,300 crore from the Navy, the Coast Guard and commercial vessels.
Reliance Infrastructure had acquired Pipavav Defence and Offshore Engineering Co. Ltd in March 2015, which was later renamed as Reliance Defence and Engineering. Immediately after the acquisition, Reliance Group had announced its plans to exit CDR. The Reserve Bank of India (RBI) had also given its nod to Reliance Defence to exit the CDR package. The stock of Reliance Defence was trading at Rs66.10 on the BSE, up 3.44% from its previous close.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.