Infra firm IVRCL to split into two, restructure debt

Debt-laden infrastructure firm IVRCL Ltd has decided to split its engineering procurement construction (EPC) and assets business - land and build operate transfer (BOT) - into two separate companies.

In a filing with the bourses on Saturday, the company said the board has decided to convene a shareholders' meeting to approve the conversion of part of the debt into equity shares of the company pursuant to invocation of strategic debt restructuring by a joint lenders forum.

''To carve the business of the company into 'EPC Company' and 'Assets Company' which includes Land/BOT and other assets, by way of scheme of arrangement subject to receipt of 'No objection letter' (NOC) from the lenders/joint lenders forum, approval of the High Court of Andhra Pradesh and Telangana and any other approvals as may be required,'' IVRCL said.

The company felt that the spinning off of EPC business would enable investment by potential equity investors. On 1 December, the company said in the joint lenders forum (JLF) held on 26 November 2015, the lenders invoked Strategic Debt Restructuring (SDR) in the company.

Last year, it recast its Rs7,300 crore debt under a corporate debt restructuring (CDR) package.

The strategic debt conversion option will give lenders the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package and take control of the company operations.

The banks or the lenders are the major shareholders of the company holding 43.88 per cent of the equity. As on 30 June, the promoters' stake in the company stood at 8.7 per cent. The company is yet to disclose the promoters' stake as on 30 September.