ABG Shipyard Receives Approval For CDR
Biswajit Yadav / 31 Mar 2014
ABG Shipyard has finally received the approval for its Corporate Debt Restructuring (CDR) package of Rs. 10,000 crore. This was approved by a 22-member lenders consortium. Following this news, the shares of the company went up by 3.91% to Rs 257.60 on (March 28, 2014) Bombay Stock Exchange (BSE).
ABG Shipyard has finally received the approval for its Corporate Debt Restructuring (CDR) package of Rs. 10000 crore. This was approved by a 22-member lenders consortium. Following this news, the shares of the company went up by 3.91% to Rs. 257.60 on Bombay Stock Exchange (BSE).
Under the CDR, around Rs. 2500 crore worth of long term loans and Rs. 7000 crore of working capital loans are going to be restructured. According to the proposal, the company will get two years of moratorium for interest payment and will also get eight years to repay the loan. This will give the company a bit of relaxation and can increase its ability to meet the obligations. This will also help the company to strengthen its core operations.
Under the period of restructuring, the banks will have to take a hair cut of Rs. 900 crore, the company's interest rate has been reduced to 11% from 13.5% and the promoters will have to contribute Rs. 230 crore. The promoters have total stake of 69.12% in the company.
During Q3FY14, the company has not performed well. The topline of the company has reduced by more than 39% YoY to reach Rs. 284.55 crore as compared to the corresponding period of the previous year. The other income of the company has also plunged by more than 95% YoY to Rs. 0.76 crore as compared to the previous year. The company has reported a net loss of Rs. 156 crore in Q3FY14 against profit of Rs. 18.62 crore during Q3FY13. The loss of the company was mainly due to the increase in interest cost and exceptional items. The interest cost of the company increased by more than 53% YoY to Rs 162.78 crore. The exceptional items of Rs. 72.13 crore were on account of financial costs which were incurred by the company on assignment of a guarantee from one banker to another banker.
So far, the company has not disclosed any further plans which they are going to adopt for the restructuring. Hence, we advice that the investors should take their call on the stock only after more clarity emerges from the company's side.
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