Banks invoke RBI’s SDR norms to take control of Ballarpur Industries
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New Delhi: Lenders of Ballarpur Industries Ltd (BILT) will take management control of the cash-strapped company as part of strategic debt restructuring (SDR)—a Reserve Bank of India (RBI) mechanism to address bad loans.
The company has also sought approval of shareholders to re-classify its authorised share capital. BILT is reported to be saddled with an estimated consolidated debt of over Rs6,000 crore.
BILT will issue equity shares that will constitute 51% of its fully paid equity share capital, upon conversion of debt into equity under the SDR scheme, the company said in a regulatory filing on Wednesday. This will be subject to approval of shareholders, it added.
The company said it will re-classify share capital into 150 crore equity shares of face value Rs2 each and 1 crore preference shares of face value Rs100 each, constituting Rs400 crore. Currently, the authorised share capital of the company comprises 75 crore equity shares of Rs2 each and 2.5 crore preference shares having face value of Rs2 each.
Earlier this year, the company had said it is in advanced talks with banks for various options, including infusion of private equity funding, for itself and its subsidiaries.
The company has been witnessing worsening liquidity situation and had curbed operations due to inadequate working capital. Fitch ratings had in January downgraded the long-term issuer default ratings for BILT citing worsening liquidity situation and curbing of operations.
The rating agency had downgraded BILT and placed it on Ratings Watch Negative (RWN) on 29 July 2016, based on its deteriorating credit profile and significant refinancing risks for upcoming debt maturities. Shares of Ballarpur Industries remained unchanged at Rs19 on BSE.