Led by ICICI Bank, lenders to Lanco Resources International (LRIPL), the overseas arm the debt-laden Lanco Infratech, which owns the Griffin Coal Mine in Australia, have appointed PwC as the receiver and entrusted it with the task of finding an investor, following loan default.
The loss-making mining company owes Rs 6,250 crore plus accumulated interest and penalties to the lenders. It has not been servicing the loan since December 2016.
The Lanco Group which has been in financial doldrums for quite a few years, is also a defaulter with a consolidated net of over Rs 40,000 crores.
ICICI Bank Singapore is the leader of the lenders' consortium which also has other domestic and overseas lenders, according to a senior Lanco official.
The official, who requested not to be quoted, told PTI here that the lenders will have 18 months to bring in a new investor and hand over the management of the mine which means PwC will have to find a buyer investor within that time frame.
The official also said the accumulated loss of Griffin Coal now stands at over Rs 2,000 crore eroding its net worth.
Receivership is a type of corporate action in which a receiver is appointed by courts or creditors to run the financially stressed company. In most cases, the receiver is given ultimate decision-making powers and has full discretion in deciding how the assets under his control will be managed.
"ICICI Bank Singapore and other lenders have appointed
PricewaterhouseCoopers Advisory Services as the Receivers and Managers of the company...And to find an investor/buyer. PwC as the reciever would also have to ensure that pledged shares are transferred to the new receiver administration for the purpose of security," the official said.
Though the shares are transferred on the lenders's name, Lanco will continue to be beneficial owner, the official added.
"The lenders now have 18 months to change the management (from Lanco) wherein majority stake has to be given to somebody. The banks will now start looking for an investor who can put in money into the mine and bring value to the company and shares," the official explained adding, "Lanco is expected to remain a minority shareholder in the Australian company if the new investor acquires over 50 per cent stake."
The struggling parent Lanco Infratech through its Australian subsidiary, acquired the loss-making Griffin Coal Mining Company and Carpenter Mine Management for AUD 740 million in March 2011 when commodity prices were at the peak.
The sale process was overseen by Kodramentha- the administrator of Carpenter Mine. But even after the management buyout the mines are making cash losses from the year of acquisition in 2011 and the accumulated losses have jumped to Rs 2,000 crore as of march 2016. One of the reasons for this is also the crash in coal prices since early 2014.
All the efforts put in by the Lanco to bring an investor failed due to subdued coal prices.
In 2015, Lanco had alleged that Kordanentha misled the bidders by withholding two reports suggesting the Griffin coal deposits were much lower than disclosed first.
Denying Lanco's allegation, Kordamentha, in turn, made a counter allegation that Lanco defaulted its installment to the tune of AUD 150 for the mine. Both the parties are slugging it out in Australian courts now.
When contacted, T Adi Babu, Chief Operating Officer- Finance, Lanco Infratech said the company is currently not in a position to invest large amounts in the mine expansion.
"The mine (in Australia) cannot to be expanded (in order to create value) as most of the approvals have come for port and the mines. Somebody has to pump in money. We do not have the wherewithal to do that now," Adi Babu told PTI.
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