Uttam Galva has offered to pay Rs 28.8 billion upfront to settle with all of them and take the firm out of the insolvency proceedings.
Calls made to Uttam Galva Managing Director and CEO Anuj R Miglani for comments, remained unanswered. According to the five-page letter reviewed by PTI, the company proposed “a one-time settlement (OTS) of the dues of lenders to the extent of 51 per cent of the outstanding claims as on the date of non-performing asset (NPA), that is Q1 FY17”.
SBI has the highest dues at Rs 15.3 billion followed by Canara Bank — Rs 8.6 billion and Punjab National Bank — Rs 6.6 billion.
If the proposal is accepted, lenders would have to take a haircut or write-off 49 per cent of the dues. It may also lead other companies
to file similar settlement applications with their lenders, stalling the insolvency and bankruptcy proceedings initiated against 12 big loan defaulters.
In the letter to SBI, Uttam Galva said its loan account had turned into an NPA during Q1 of 2016-17 fiscal year due to adverse operating conditions.
“Being an OTS and not debt restructuring, the proposal doesn’t fall under the requirements specified in the RBI guidelines of February 12, 2018 (on insolvency and bankruptcy proceedings). Hence, the procedure for debt restructuring mentioned in the circular such as independent credit evaluation etc may not be required,” Uttam Galva has said.
Stating that its proposal has minimum payment risk for the lenders as the entire amount is paid upfront, the company said that since the account has already been classified as D1 by the lenders and referred to NCLT, 50 per cent provisioning must have already been done by lenders.
“In this case, an OTS of 51 per cent would not adversely impact the financial performance of the lenders,” it said. “We once again request lenders to consider this proposal as it is in the best interest of all the stakeholders.” In future, “we assure you our complete cooperation in all the matters and reiterate our commitment to address all issues to your full satisfaction to the best of our ability,” it added.
Stating that the company has tried for a resolution in “all possible manner,” the letter said lenders neither accepted a proposal to bring in private equity investor AION Capital Partners nor did they agree to a strategic debt restructuring (SDR) offer.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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