The debt restructuring was done under the RBI’s Scheme for Sustainable Structuring of Stressed Assets which allows banks to cut the debt burden of borrowers by as much as 50%, provided lenders are convinced that the remaining loan can be serviced from company cash flows. Photo: Aniruddha Chowhdury/Mint
The debt restructuring was done under the RBI’s Scheme for Sustainable Structuring of Stressed Assets which allows banks to cut the debt burden of borrowers by as much as 50%, provided lenders are convinced that the remaining loan can be serviced from company cash flows. Photo: Aniruddha Chowhdury/Mint

Panel approves banks led by SBI to recast Rs8,285 crore Bajaj Hindusthan Sugar debt

Bajaj Hindusthan Sugar in a statement to stock exchanges said as per the plan, the debt of Rs4,789 crore will be considered as 'sustainable', while the rest will be treated as 'unsustainable by the SBI

New Delhi/Mumbai: An Indian overseeing committee has approved a proposal submitted by a group of lenders, led by State Bank of India (SBI), to restructure an Rs8,285 crore ($1.3 billion) debt of Bajaj Hindusthan Sugar Ltd.

As per the plan, the company’s debt of Rs4,789 crore will be considered as “sustainable", while the rest will be treated as “unsustainable", India’s top sugar maker said in a statement to stock exchanges on Friday. A loan is considered as sustainable when a company is able to service it from its cash flow.

The debt restructuring was done under the Reserve Bank of India’s (RBI) Scheme for Sustainable Structuring of Stressed Assets, or S4A. It allows banks to cut the debt burden of borrowers by as much as 50%, provided lenders are convinced that the remaining loan can be serviced from company cash flows. The plan also allows a dilution in shareholdings.

The promoters of Bajaj Hindusthan Sugar will cut their stakes to 15.43% from 26.02% by selling a part of their shareholdings to the lenders. Of the company’s unsustainable debt, Rs3,483 crore will be converted into optionally convertible debentures, the statement said.

Bajaj Hindusthan Sugar is seeking approvals from its shareholders and individual lenders, according to the statement. It posted losses in five of the last six quarters, according to data compiled by Bloomberg. Bloomberg

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