The Rs 22,621-crore debt recast of Global Telesystem (GTL) and its group companies has been deferred till November-end, according to banking sources.
The package was supposed to have been readied by the end of this month, but has hit the hurdle of equity issuance terms with the promoters. The lenders are seeking better equity terms for the future interest income they may have to forgo.
“While most lenders have, more or less, agreed on the conditions of restructuring, there are certain issues we are still negotiating with promoters,” said a senior public sector bank official. The last round of meetings was just before Diwali. The next meeting of lenders and promoters is scheduled for the first week of November.
State Bank of India, ICICI Bank, Bank of Baroda and IDBI Bank are among the lenders to GTL and its group entities. SBI Capital Markets Ltd, the investment banking arm of SBI, is acting as the advisor for rejigging GTL’s debt obligations and review of its business plans.
In the second quarter, the corporate debt restructuring (CDR) forum admitted the cases of GTL and associate entities GTL Infrastructure and Chennai Network Infrastructure. GTL has made investments in GTL Infra and holds many bank guarantees.
For the lenders, GTL Ltd is like a de facto holding company for GTL Infra.
GTL’s over-leveraged balance sheet has been a matter for concern for all lenders. With the rise in interest rates over recent months, there have been higher payouts.
There has also been a sharp drop in revenue and cash flow, because of the squeeze in the telecom sector, which has triggered low capital expenditure, lesser spending, muted growth and falling demand.
A Mumbai-based head of a public sector lender said at the time of referring the case to the CDR, the initial expectation case was that it would take a month (till October 30).
“Lenders are taking utmost care to protect their interests. Prima facie, the purchase of Chennai Network Infrastructure, the telecom tower company, has happened at a very high valuation. This had complicated the judgment about cash flows and repayments plans,” he added.
