Moneycontrol Bureau
Shares of Gammon India are locked at 20 percent upper circuit on Tuesday after lenders decided to take control of the company by converting debt into equity shares.
"Corporate Debt Restructuring Empowered Group (CDR EG), on November 23, has approved the invocation of strategic debt restructuring (SDR) in the company by CDR Lenders, pursuant to RBI Circular dated June 8," the company said in its filing.
As per RBI notification, if the borrower is not able to achieve viability milestones and/or adhere to the critical conditions, the joint lenders forum (JLF) must immediately review account and examine whether the account will be viable by effecting a change in ownership.If found viable under such examination, the JLF may decide on whether to invoke SDR, i.e. convert the whole or part of the loan and interest outstanding into equity shares in the borrower company, so as to acquire majority shareholding in the company, the RBI said.
Slowdown in economy and delays in projects forced Gammon India to go for debt restructuring in September 2013 as it has more than Rs 14,000 crore worth of debt on its books. Since then, as a part of corporate debt restructuring, the company divested some of its assets.
On November 17, the board members decided to transfer company's civil engineering, procurement and construction business to Gammon Retail Infrastructure Private Limited, the company's wholly owned subsidiary, which is subject to lenders and shareholders’ approval.
Gammon India posted a loss of Rs 187.50 crore in June quarter against loss of Rs 73.53 crore in preceding quarter and Rs 120.27 crore in same quarter last fiscal. Revenue also declined to Rs 744.23 crore during the quarter from Rs 1,019 crore quarter-on-quarter and Rs 922.82 crore year-on-year.
At 14:36 hours IST, the scrip of Gammon India was quoting at Rs 15.49, up Rs 2.58, or 19.98 percent amid high volumes on the BSE. There were pending buy orders of 315,194 shares, with no sellers available.Posted by Sunil Shankar Matkar
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