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Lanco Infratech Ltd will seek shareholders’ nod to increase the company’s authorised capital to ₹1,200 crore from ₹500 crore and allot shares to lenders according to a corporate debt restructure (CDR) package.
The lenders will have the right to convert debt into equity if the debt obligations are not met. The move to hike capital is part of the CDR mechanism worked out by the diversified infrastructure company.
“We expect the entire process of securing shareholders’ nod will be concluded before March. This will then pave the way for making arrangements with various bankers who have taken part in the debt restructure process,” T Adibabu, Chief Operating Officer — Finance, Lanco Infratech, told Business Line .
₹11,155-cr restructureThe restructure facility has been extended by a consortium of 25 lenders for ₹11,155 crore and includes restructured term-loan, working capital and working capital term-loan.
Post the agreement, the shareholding of the lenders will be 65.83 per cent. This will eventually depend upon exercise of the option to convert the debt if the debt obligations are not met. If converted, the promoters’ holding will come down to about 25.26 per cent.
The Corporate Debt Restructuring Empowered Group of the RBI had cleared a CDR package for the company in December 2013 and a master restructure agreement was signed on December 27, 2013, between the company’s management and the CDR lenders to facilitate the operation of the agreements entered into, and execute necessary documents including share allotments according to the agreement.
Raising borrowing limitThe company will also seek shareholders’ nod to increase its borrowing limit to ₹15,000 crore. The lenders will have the right to convert debt into equity if the company does not meet its debt obligations. And if these lenders exercise the option of conversion of debt into equity, debt will be reduced proportionately, Adibabu said.
A part of the working capital loan and priority loan will be converted into equity. The company is seeking shareholders’ nod to facilitate this conversion. As part of the package, promoters have infused fresh funds to the tune of ₹152 crore and the shareholders’ nod will be taken to convert this into equity.
On Tuesday, Lanco Infra shares closed at ₹6.52 on the BSE, down 1 per cent.
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