Lenders are looking at the possibility of taking control of majority stake in Electrosteel Steels under the Strategic Debt Restructuring (SDR) route to recover over Rs 9,000 crore.
The company is currently managed by the Kejriwal family which owns 45.23 per cent of the equity. The company’s net debt at the end of March 2015 was Rs 9,208 crore, up 13 per cent over the previous year. Although its debt was restructured under the corporate debt restructuring (CDR) system in 2013, the company has failed to come out of the financial problems. It had delayed payments of interest by over 60 days and consequently the exposure has been classified as an SMA-2 (Special Mention Account) account by the lenders.
Joint Lenders Forum headed by State Bank of India is considering various options including the SDR to recover their money, said a banking source. Once the banks in the JLF convert the company’s debt into equity and acquire majority 51 per cent control, they will have to bring in a new strategic investor to take over the company from its promoters.
The company said no lender has approached the company for taking control of it under the SDR route to recover their dues. “We would like to inform you that no lender has approached the company for the same,” the Kolkata-based firm said in a BSE filing following reports that lenders may take over the firm’s control.
While giving more teeth to lenders, the Reserve Bank of India had in June allowed banks to take control of debt-laden companies by converting loans into equity, if a debt restructuring fails to revive them within a stipulated timeframe. Sebi has already relaxed the norms for banks to takeover the ownership of such companies under the SDR regime.