Mukand to settle Rs 600 crore debt

Mukand Ltd has negotiated a one-time settlement with its lenders to settle Rs 600 crore of its outstanding debt of Rs 1,200 crore.

This is possibly the first instance of a company, which got its debt recast on the corporate debt restructuring (CDR) platform, striking a one-time settlement with its lenders outside the CDR.

Sources close to the development said, "The company will make an upfront payment of around Rs 300 crore to its lenders, in lieu of which the lenders have agreed to waive the balance amount." The lenders include five nationalised banks and three private sector banks.

Company sources were unable to give any comment on the matter. The company has raised the requisite funds from local lenders at a lower interest cost, thereby, bringing down the average cost of its debt to 10 per cent from 16 per cent. The refinancing of these loans will save Rs 30 crore per annum for the company.

Mukand had received an approval for its CDR scheme in June last year, according to which, the company would be repaying its outstanding debt over the next 11 years, with a two-year moratorium period.

However, on account of the company's improving financial health, the lenders had proposed to settle a substantial part of the loans immediately. The consortium was led by Allahabad Bank, to which the company owed Rs 123 crore.