The board of directors of Jindal Vijayanagar Steel Ltd (JVSL) has approved a financial restructuring package aimed at bringing down the interest rates on existing debts as well as on restructuring the schedule and modalities of repayment.
The company also plans to convert a part of the debt into equity as well as issue fresh capital, both preference and equity, to the existing shareholders.
As per the scheme, the company has proposed to issue 40 preference shares (with a coupon of 0.0001 per cent) of Rs 10 each and 60 equity shares of Rs 10 each for every 100 equity shares held by all the existing equity shareholders.
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Besides, the company has proposed to convert a part of the term loans, non-convertible debentures and optionally fully convertible debentures (OFCDs) into equity shares at par.
A reduction in the interest rates on rupee debt to 14 per cent has also been proposed. The company also plans to issue rupee term loans at an interest rate of 14 per cent or OFCDs.
Further, the company plans to issue rupee term loans or non-convertible debentures at zero per cent interest so as to compensate the original lenders for the loss on account of reduction in interest rates. The company is also working on a structured interest payment pattern on rupee debt.
However, according to sources, the proposed debt recast programme is yet to be approved by the domestic financial institutions.
The total debt on the company