Reliance Infra lenders sign inter-creditor agreement for debt resolution
12 July 2019
A group of banks comprising 16 lenders to debt-laden Reliance Infrastructure Ltd on Thursday signed an inter-creditor agreement (ICA) in an effort to resolve the debt that has gone non-performing.
This gives two Anil Ambani-led firms - Reliance Infrastructure and Reliance Power - more time to resolve debt issues.
An ICA provides the ground rules for the finalisation and implementation of a resolution plan (RP) for borrowers with credit facilities from more than one lender. The two firms have been facing a liquidity crunch that has hurt their ability to repay debt.
R-Infra signed an inter-creditor agreement (ICA) with all its lenders, while the power company announced a debt-restructuring deal with US Exim Bank for its Samalkot project.
RInfra’s lenders have all signed up to resolve its debt, which is estimated at Rs5,900 crore. The development comes on the back of a June 7 RBI circular on “Prudential Framework for Resolution of Stressed Assets.” Under the framework, an RP has to be agreed to by 75 per cent of the lenders by value of debt and 60 per cent by number of lenders.
With the ICA, RInfra has achieved a 180-day standstill period. The purpose of the standstill period is to give the senior creditor an exclusive period of time during which it may assess its rights and, if it determines that it will enforce its rights against the collateral, to enforce such rights without interference from the junior creditors.
The company will implement the RP well ahead of the 180-day deadline by monetising assets, a company spokesperson said.
As part of this, it has announced the sale of the Delhi-Agra toll road to Singapore-based Cube Highways and Infrastructure III. The deal will close by the end of August.
Further, RInfra plans to lease out its marquee headquarters — Reliance Centre — in suburban Mumbai, and utilise the entire proceeds to pare its debt.
The property, located at Santacruz (East), is a modern building with more than 6.95-lakh sq ft of office space on a 15,514-sq m plot.
R-Infra signed an inter-creditor agreement (ICA) with all its lenders, while the power company announced a debt-restructuring deal with US Exim Bank for its Samalkot project. The two firms have been facing a liquidity crunch that has hurt their ability to repay debt.