The CDR proposal involves a 10-year door-to-door back-ended repayment plan with a reduced interest rate, which effectively means a 3% savings on interest burden for financially troubled Suzlon
Mumbai: Wind energy major Suzlon said its lenders, comprising 19 banks led by State Bank of India (SBI), have approved its proposal to rejig Rs9,500 crore of domestic debt, providing a big relief to financially troubled company, reports PTI.
“The empowered group of corporate debt restructuring (CDR) cell comprising 19 lenders formally approved our CDR proposal to recast Rs9,500 crore of domestic debt. The package is effective from 1 October 2012 and does not include our foreign currency debt,” Suzlon said in a statement.
The Tulsi Tanti-promoted company further said, the CDR proposal involves a 10-year door-to-door back-ended repayment plan with a reduced interest rate, which effectively means a 3% savings on interest burden for the company.
The proposal also involves a two-year moratorium on principal and term-debt interest payments, apart from a fresh working capital loan of Rs1,800 crore, which will have a six-months interest moratorium, which is aimed at helping the company accelerate execution of its strong order book.
During the course of the two-year moratorium, interest worth Rs1,500 crore will be converted into equity, the company said.
The Pune-headquartered company further said that the package also includes promoters bringing in Rs250 crore of fresh equity, of which Rs62 crore was infused last December.
“This approval clearly underscores the fundamental viability of our business,” Kirti Vagadia, chief financial officer of the Suzlon Group.
SBI is the consortium leader and the CDR plan has been drafted by SBI Caps. SBI has a Rs3,500-crore exposure to the company.
Suzlon was looking at recasting Rs11,000 crore of its Rs14,568 crore domestic loans (as of the September quarter).
This debt is four times its equity. It sought the debt restructuring process during late October.
The other main lenders include IDBI Bank, Bank of Baroda, Axis Bank, Punjab National Bank, Indian Overseas Bank, Central Bank of India, Yes Bank, and State Bank of Bikaner & Jaipur, among others.
CCI said the proposed combination is not likely to have an appreciable adverse effect on competition in India as the size of the business instalment loans portfolio of Barclays in India is relatively insignificant
New Delhi: Fair trade regulator Competition Commission of India (CCI) has approved Kotak Mahindra Bank’s proposal to acquire Barclays Bank’s unsecured loan business in India, saying the deal would not have any adverse impact on competition, reports PTI.
The proposed transaction involves Kotak’s acquisition of business instalment loans portfolio of Barclays India and Barclays Investments and Loans (India).
Business instalment loans are provided by Barclays to individuals, sole proprietorships, partnership firms and companies for business needs or working capital requirements.
In its order dated 22nd January, CCI noted that “the proposed combination is not likely to have an appreciable adverse effect on competition in India”.
The regulator observed that the size of the business instalment loans portfolio of Barclays in India “is relatively insignificant”.
“There are also other players in the Indian banking and financial services sector providing similar loans,” CCI said.
“In view of the foregoing, it is observed that the proposed combination is not likely to give rise to any adverse competition concern in India,” it added.
Barclays and Kotak had reached an agreement on the proposed deal in December last year. Following this the entities had approached CCI for approval on 2 January 2013.
Banks are encouraged by the RBI to consider the option of raising Tier II capital through public issue to retail investors while issuing subordinated debt
Mumbai: The Reserve Bank of India (RBI) has asked banks to issue bonds to retail investors so as to deepen the corporate debt market, reports PTI.
“With a view to deepening the corporate bond market in India through enhanced retail participation, banks, while issuing subordinated debt for raising Tier II capital, are encouraged to consider the option of raising such funds through public issue to retail investors,” RBI said in a notification.
However, it said that while doing so banks are advised to adhere to the prescribed conditions.
The central bank also emphasised that the investor is aware of the risk characteristics of regulatory capital instruments.
Banks usually raise Tier II capital by issuing subordinated debt to banks and large investors.
As per the prescribed format, the amount of subordinated debt to be raised may be decided by the board of the bank.
The bonds have a minimum maturity of five years. However, if the bonds are issued in the last quarter of the year i.e. from 1st January to 31st March, they should have a minimum tenure of 63 months.
The coupon rate of such bonds are decided by the board banks.