Mumbai: The Reserve Bank of India’s oversight committee has approved a debt restructuring package for Supreme Infrastructure India Ltd under the central bank’s scheme for sustainable structuring of stressed assets (S4A).
Under S4A, a defaulter’s debt is classified into sustainable and unsustainable parts. The former is left alone to perform or be restructured if necessary, while the unsustainable debt would be converted into equity or equity-like, long-dated securities and redeemed at a later date.
In case of Supreme Infrastructure, out of the total debt of Rs2,401 crore, about Rs1,271.30 crore is considered as sustainable, the company informed stock exchanges on Thursday. The remaining debt of around Rs1,130 crore will be converted into optionally convertible debentures (OCD).
These debentures, with a five-year tenor, can be converted into equity shares by the lenders in case the company defaults on repayment of debt under this portion.
Repayment of OCDs will be made in seven equal instalments starting with the end of ninth fiscal year from the date of issuance of these instruments.
The resolution plan does not involve change of management. However, promoters will transfer 4.61 million shares representing a 17.95% stake to the lenders. At the end of March, promoters held a 37.78% stake in Supreme Infrastructure.
Following the oversight panel’s approval, the company will seek a final approval from individual lenders in the consortium, as well as from its shareholders.
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State Bank of India, ICICI Bank Ltd, Axis Bank Ltd, Union Bank of India, Punjab National Bank, Indian Overseas Bank, and SREI Infrastructure Finance Ltd, among others, are lenders to the company.
In June, the central bank added three members to the oversight committee, taking the total strength of the panel to five.
The resolution plan, under S4A, where the exposure is more than Rs500 crore requires approval of the panel. In a 13 June circular, RBI directed banks to file insolvency proceedings against 12 large borrowers. For others, the central bank asked banks to finalise a resolution plan within six months.