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ADB softens stand on CESC share pledge

Calcutta, July 27: The debt restructuring of CESC may be hastened as the Asian Development Bank (ADB) has softened its stand on the share pledging issue. The Manila-based bank, which had initially asked the promoters to pledge 100 per cent of their holding, has agreed to the Goenkas’ offer to pledge just 40 per cent. The Goenkas currently hold a 40 per cent stake in the company.

The promoters have also informed the banks and FIs that they can infuse fresh equity of Rs 50 crore. Managing director Sumantra Banerjee said, “ADB had agreed in-principle to our proposal. However, we are waiting for the other lenders’ approval. The matter is being discussed by the eight-member steering committee formed by banks and financial institutions. We hope the debt restructuring exercise will be in place by late August or early September.”

Sources said the CESC top brass had a meeting with ADB two weeks ago. “Following this meeting, ADB and CESC came to a settlement over the share pledging issue,” they added.

CESC owes around Rs 3,300 crore to banks, domestic financial institutions, foreign banks and foreign bond-holders. Of this, CESC will have to repay around Rs 1,800 crore to domestic institutions alone. ICICI Bank has the largest exposure of about Rs 900 crore in the company followed by Industrial Development Bank of India at about Rs 250 crore.

Multilateral funding agencies like International Finance Corporation and ADB have debt exposures of about Rs 300 crore and Rs 150 crore respectively. The other major creditors are CDC Capital with an exposure of Rs 100 crore and FRN holders with about Rs 350 crore.

The company has asked for an extension of the tenure of loan repayment by two-and-a half to three years as a part of the debt restructuring package.

However, till the debt restructuring package is cleared, CESC will have to repay its loans according to the formula worked out by the steering committee.

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