Vishal Retail CDR likely to be admitted in next few days

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Vishal Retail CDR likely to be admitted in next few days

Vishal Retail corporate debt restructuring (CDR) is likely to be admitted in next few days. CNBC-TV18’s Tanvi Shukla reports.

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Vishal Retail corporate debt restructuring (CDR) is likely to be admitted in next few days. CNBC-TV18's Tanvi Shukla reports.

Here is a verbatim transcript.

Vishal Retail has about Rs 730 crore of debts on its books right now and this is what the CDR will be looking to sort of work around. The CDR is expected to be admitted in the next few days. Sources are telling us that State Bank of India (SBI) will be the lead banker. The bank has about Rs 170 crore of exposure to the company. The company and lenders have sort of come about to earn consensus on the broad counters of CDR. The lenders are likely to give a four-year moratorium on the interest payment as well as the principle amount. Vishal Retail had about Rs 100 crore of interest payment annually. So through this moratorium the company is expecting to generate that much amount of cash flow on a yearly basis. Also, as part of the CDR, no new credit lines will be given to the company. Bringing in a strategic investor is mandatory as part of the CDR process.

The company is in talks with the couple of investors. The company also needs about Rs 100 crore of fund infusion to continue running the business for the next two years. The promoters stake is expected to decline below 51% and the promoters will be pledging about 51% of this stake in favour of the lenders.

Meanwhile, the company is trying to sort out the mess that they have gotten into. The inventory cycle has been brought down from nine months to five months. Sources are telling us that this is expected to go down further to about three to four months. The company is also planning to shut down another dozen stores, which will not really make much difference to the square feet space but will help to bring down the losses since most of these stores are currently running into losses.

Most of these loans have been doing well for a while. The company has been talking to the banks; they have already rolled them over a couple of times in certain banks cases. There about 10-13 banks involved. Each amount is about Rs 50-120 crore. So the rollover has already happened a couple of times and now it is just amounted to an extent that the company cannot pay any part of it. Secondly, very important and crucial part of the CDR is to get strategic investor on board. If the company dose not manage to find any partly which is interested in getting it out of the mess then the CDR may not actually take place.