Bulk tea major McLeod Russel India on Friday said its bankers have signed an Inter Creditors Agreement (ICA), a precursor to a resolution plan for debt restructuring, that rekindled hope of revival of the once largest tea producer of the world.
After the promoters of McLeod reach a settlement with a financial creditor, Techno Electric & Engineering, the company could be out of National Company Law Tribunal’s insolvency process.
The trigger for the insolvency application by Techno was a loan agreement for providing Rs 100 crore inter-corporate deposit (ICD).
We hope to reach a satisfactory resolution shortly with the bankers on debt recast, a McLeod official told PTI.
"All the banking lenders have signed/executed an Inter Creditors Agreement (ICA) to provide for ground rules for finalisation and implementation of Resolution Plan in respect of borrower/Company”, McLeod Russel said in a stock exchange filing.
There are nearly 8-10 lenders including a combination of private and public-sector banks, such as Axis Bank, UCO Bank, Allahabad Bank, Indusind Bank and ICICI Bank.
The outstanding debt including interest will be around Rs 2100-2300 crore, company officials estimated which is not sustainable for the tea major.
Till March 2018, McLeod had 52 estates in the country producing 67 million kg of tea with a total saleable production of 89 million kg.
By FY20, its total saleable quantity had dropped by nearly 53 per cent to 42 million kgs with the company selling estates to square off debts.
A slew of ICDs unsecured borrowings from other entities extended to some of the other BM Khaitan group companies, hurtled the tea major into a serious crisis.
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