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Lenders to convert 10% of Bharati Shipyard's loans into equity - 2012-06-04

Lenders to the debt-ridden Bharati Shipyard Ltd have agreed to convert 10 per cent of the company's outstanding term loans of around Rs 2,300 crore into equity. This is part of the debt-restructuring approved by bankers, who the met here on Friday to finalise the Corporate Debt Restructuring scheme for the company. Twenty-five lenders led by State Bank of India have a total fund and non-fund based exposure of around Rs 5,800 crore to the Mumbai based shipyard. According to an official of SBI Caps, advisor to the CDR scheme, majority of the lenders have agreed to the restructuring package approved at today's meeting.

Ten per cent of the term loans will be converted into compulsorily convertible debuntures. The balance amount will have to be paid in the next ten years.

The company has been given a moratorium of 18 months for repayment of the balance amount. So the repayment will begin from April 2013. The promoter has also agreed to bring in an additional equity of Rs 118 crore according to the CDR, said a person familiar with the development.

The company' debt mounted following its acquisition of the Mumbai-based offshore services company, Great Offshore Ltd. Bharati Shipyard officials were not available for comment. The company currently has an order book of Rs 6,000 crore.

Though the shipping industry is currently facing bad weather, the shipyard expects fresh orders once the existing orders are executed. Lenders believe that the CDR scheme approved today will help the company to recover from the current liquidity crisis, said a bank official. The company posted a net loss of Rs 36.5 crore in January-March 2012, from a net profit of Rs 1.6 crore in the same quarter of 2010-11.

The company stock closed at 61.80 on BSE on Friday marginally down from the previous close.

Source : Hindu Business Line