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CESC, lenders agree to bury hatchet

Calcutta, March 28: The RPG group has agreed to pledge a part of its holding in CESC with its lenders and infuse fresh capital in the form of equity in keeping with the conditions set by the ICICI Bank-led consortium of financial institutions for restructuring the company’s Rs 3,300-crore debt.

Sumantra Banerjee, managing director of CESC, said: “We have asked our lenders to reschedule our loans and reduce the interest on them. In return, they have asked the promoters to infuse funds and pledge a part of their holding. The promoters have already indicated their agreement to these conditions, and the nitty-gritty is being discussed between the CESC management and the lenders.”

CESC wants its lenders to extend the term of its loans by three years to “match the company’s cash flow”.

“CESC will be recovering over Rs 400 crore over three years (in 36 monthly installments) from arrear payments. The revision of tariff has put to rest all questions regarding the inherent viability of our business, but we need time to repay our debts,” he added.

CESC also wants a significant reduction in the rate of interest on its loans. It pays 16-18 per cent interest on its domestic borrowings, which, the company says, is way too high. Banerjee claimed the lenders had agreed to reschedule the loans and cut the interest rate as demanded by the company. “We still need six to eight weeks to close the deal with our lenders,” he added.

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