Reliance Defence and Engineering Limited (RDEL), controlled by Reliance Infrastructure (RInfra), on 2 May 2017 said it has received approval for exiting the corporate debt restructuring (CDR) scheme. The approval for exit plan of RDEL was granted by the consortium of lenders led by IDBI.
According to RDEL, it has received the approval from the CDR Empowered Group (CDR-EG) for exiting the scheme. The company in a statement said, "As part of the refinancing scheme approved by the lenders, the door-to-door tenure of RDEL's term loans stands extended to 18 years".
As per the refinancing scheme, approved by the lenders, the RDEL’s existing debt of about Rs 650 crore will be converted into equity shares at a price of Rs 59.35 per equity share.
The company in a statement pointed out that RDEL's shareholders had already approved the "issue of equity shares to lenders by conversion of debt”. The approval was granted at its extraordinary general meeting that was held on 20 March 2017.
The statement also said, "In line with the RBI approval, RInfra through its subsidiary has also increased its shareholding in RDEL to nearly 31 per cent".
Besides, IDBI, the lead lender of the consortium, has also written to the Defence Ministry and informed it about the approval of RDEL’s CDR exit plan and refinancing scheme, which was granted by CDR-EG. Exiting the CDR would provide increased financial flexibility to the company.
Future course of action
This letter of confirmation to Defence Minsitry by the IDBI will make RDEL eligible for future contracts of the Indian Navy. With this, RDEL also becomes the second private sector company that will compete with government owned shipyards for contracts to make landing platforms dock, submarines and corvette. L&T is the first private company to have similar rights of bidding for contracts for Indian Navy.
When: 2 May 2017