29 June 2019: The Uday Kotak-led board of IL&FS on Friday set up a six-member committee for exploring debt restructuring of at least five identified entities, sources told FE. The committee, which includes board members Vineet Nayyar, N Srinivasan and CS Rajan, will meet bankers over the weekend to discuss the same.
The board, which met on Friday, has identified entities, including IL&FS Tamil Nadu Power Company, Road Infrastructure Development Company of Rajasthan, West Gujarat Expressway, Jharkhand Road Project Implementation Company, for debt restructuring.
The objective of this restructuring is to secure at least the principal payment of all outstanding debt, including dues to pension funds, one of the people with knowledge of the matter said. “Next two-three days we will meet with bankers. We are trying to restructure loans so that we reach sustainable debt level. The total outstanding in some cases now may be higher than sustainable level,” the source said.
The source added: “We are trying to bring the lenders on board, to see if they can agree to adjust on certain terms of these loans — such as the interest rate or the tenure. We’re also negotiating if lenders can write off certain portion of the debt.”
In case of Moradabad Bareilly Expressway, which had in May been reclassified as “green” from its earlier “amber” classification, the board is planning to modify earlier terms so that pension funds also get their dues. Bankers have already agreed to make changes to the terms of repayment, the source added.
Under the Reserve Bank of India’s new prudential framework for stressed asset resolution, once a borrower is in default, lenders must undertake a “prima facie review” of the account within 30 days. During this period, lenders may decide on the resolution strategy. In case of the above identified projects, lenders have time till June 30 to make provision of these as stressed assets or restructure the loans, the source said.
Following an order passed by the NCLAT in February, the government-appointed board of IL&FS classified its group companies into green, amber and red. The 55 companies categorised as “green” so far can fully service their debt; 13 “amber” companies can only service their debt to senior secured financial and operational creditors and 82 “red” companies are unable to service their debt altogether.
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