Infrastructure company IVRCL Ltd, which has been reeling under high debt woes, has decided to carve out two separate companies—segregating the Build Operate Transfer and Engineering Procurement Construction parts of the business. Through this move, the company hopes it will be easier to find equity investors for the EPC company, a business they have been traditionally good with.
The company in its board meeting held on Saturday said the assets’ company will include land and BOT assets. This scheme needs a go ahead from the joint lenders forum, high courts of Telangana and Andhra Pradesh among other approvals.
“We have debt of around Rs 5000 crore and this will be divided into two companies. While EPC company will have working capital and current assets, the BoT will have land and other long term assets. After the strategic debt restructuring (SDR) lenders would hold around 51% in each company,” R. Balarami Reddy, chief finance officer of IVRCL group said over telephone.
The company in the board meeting also decided to convert part of the debt into equity shares followed by the invocation of SDR by Joint Lenders Forum.”Further issue of shares to certain CDR lenders on conversion of additional Funded Interest Term Loan amount,” it said in a stock exchange announcement.
On 26 November, lenders had invoked SDR, a scheme which allows banks to convert debt into equity stake of the company and take over the management. In July last year, IVRCL had gone through CDR.
“All the BOT assets are right now sucking out cash which we are not able to direct to execute Engineering Procurement Construction projects. With the SDR, the interest for the next 18 months will be counted in debt and that way we can execute projects,” E. Sudhir Reddy, chairman, IVRCL had earlier told this newspaper.