Visa Steel Ltd on Wednesday said that its lenders had decided to convert debt into equity by invoking strategic debt restructuring (SDR) rules.
“Visa Steel Ltd has informed BSE that the lenders of the company, in its Joint Lenders Forum (JLF) meeting held on 22 September 2015, have decided to invoke strategic debt restructuring (SDR) pursuant to RBI (Reserve Bank of India) in circular dated 8 June 2015,” said the company in a notice to the exchanges.
The company is in discussion with lenders for preparing a conversion package to enable inviting a strategic investor in its special steel business, the statement said.
As of March 2015, Visa Steel has a consolidated debt ofRs.3,093.58 crore.
SDR rules, introduced by the RBI earlier this year, allow banks to take over the management of a company in cases where debt restructuring has failed. Banks can do this by converting their debt into equity. Banks can hold this equity for 18 months and in the interim sell assets or look for a new management for the company.
This is the fourth example of lenders invoking strategic restructuring rules. In July, banks decided to take control of Electrosteel Steels Ltd, a company that owes its lendersRs.9,500 crore, in the first such takeover under new rules that empower creditors to do so.
In August, a consortium of nine creditors decided to put Lanco Infratech Ltd’s 500 megawatt (MW) hydro-electric power plant in Sikkim through an SDR exercise. The same month, Jyothy Structures Ltd, a manufacturer of power transmission lines and towers, also informed the exchanges that bankers were invoking SDR rules.
Source: http://www.livemint.com/