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Gujarat NRE lenders okay debt rejig plan

Calcutta, March 25: Lenders of Gujarat NRE Coke Ltd today approved the corporate debt restructuring (CDR) package of the loss-making metallurgical coke producer.

The company had initiated discussions with its lenders on the restructuring of debt in October after registering an operating loss of Rs 53 crore in the second quarter ended September on account of poor demand.

Operating loss further increased to Rs 321 crore in the December quarter as sales of met coke — an input in the smelting of iron ore — continued to decline during the quarter. Net sales fell to Rs 193.8 crore in the December quarter from Rs 527.11 crore in the same quarter a year ago.

As part of the package, debt will be restructured over a period of 10 years with a two-year moratorium on payments. The CDR package also entails a fresh term loan of Rs 50 crore for the completion of a waste heat recovery-based power plant at Dharwad in Karnataka and an additional need-based working capital aggregating to Rs 370 crore.

Lenders also approved the funding of interest for two years, the company said.

“The approval of the CDR package establishes the fundamental viability of our business. The package will certainly help us in re-aligning our debts and help revive the company,” chairman and managing director Arun Kumar Jagatramka said in a statement.

Although the company did not specify the size of the debt being restructured, the amount of long-term borrowing on its books as on March 31, 2013 was Rs 952.81 crore and an interest expense of Rs 226 crore.

The bankers of Gujarat NRE Coke Ltd include the SBI, Bank of Baroda, State Bank of Hyderabad, Standard Chartered Bank, Axis Bank, ICICI Bank, Tamilnad Mercantile Bank and DBS Bank.

“I am confident that with the continued support of our lenders, customers, vendors and all stakeholders of the company, we will soon be able to achieve stability and produce tangible results,” Jagatramka said.

Stocks of Gujarat NRE Coke Ltd jumped 10.8 per cent to Rs 8.62 on the BSE today.

The company has an installed capacity of 1.5 million tonnes per annum with plants at Khambhalia and Bhachau in Gujarat and Dharwad in Karnataka.

LOAN TERMS

  • Debt restructuring to be done over 10 years; two-year moratorium on repayment
  • Company provided with interest funding for two years
  • Additional need-based working capital of Rs 370 crore also approved
  • Fresh term loan of Rs 50 crore given to complete Karnataka plant
 
 
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