Reliance Infrastructure's (RInfra) attempt to recast debt for its Mumbai Metro business will have to be restarted afresh as the Reserve Bank of India (RBI) has discontinued scheme for the sustainable structuring of stressed assets (S4A) route that it is planning to take.
Last month, the central bank discontinued several resolution mechanisms like S4A, strategic debt restructuring (SDR), corporate debt restructuring (CDR) and flexible structuring of long-term loans. Even the Joint Lenders' Forum has been disbanded. These have been replaced with a revised restructuring framework.
Introduced in June 2016 by the RBI, S4A scheme was an optional framework for the resolution of large stressed accounts. The scheme envisaged determination of the sustainable debt level for a stressed borrower and bifurcation of the outstanding debt into sustainable debt and equity that may provide upside to the lenders when the borrower turns around.
In the view of the new resolution framework that is believed to be more decision-oriented and time-bound, RInfra-led Mumbai Metro One Private Ltd (MMOPL) is looking at options to reduce their debt, sources said. MMOPL's debt stands at around Rs 1,200 crore.
High annual interest payout of around Rs 165 crore is the prime reason for the company opting for utilising central bank's mechanism to improve their balance-sheet. Currently, the company is paying around 11% interest on the debt, which is higher than 9-9.5% for a debt of similar tenure in the market.
IDBI Bank and Canara Bank are also among the banks that have extended a loan to the infrastructure firm.
As reported earlier by DNA Money, the S4A proposal was before the Syndicate Bank-led consortium and the joint lenders' forum was going through it.
RInfra holds 69% of the equity share capital in MMOPL, a special purpose vehicle formed in June 2008 for metro services on a 11.40-kilometre Versova-Andheri-Ghatkopar stretch. Mumbai Metropolitan Region Development Authority (MMRDA) holds a 26% stake in MMOPL and the remaining 5% is with Veolia Transport RATP Asia, France.
RInfra did not reply to an email questionnaire sent by DNA Money on the alternative route that MMOPL will opt for.
Though the actual project cost is under arbitration, RInfra has claimed it had to spend Rs 4,321 crore on the project citing delays. However, its government partner MMRDA has rejected the claim and wants the project cost to be at Rs 2,356 crore, which was the cost during the bidding stage in 2006.
If MMOPL's or RInfra's project cost is considered, around Rs 650 crore was given by the government as viability gap funding for this public-private partnership metro project. Around Rs 1,800 crore was the debt from various banks and the cost escalation or balance amount was borne by RInfra as 'sub-debt' to MMOPL.
EASY TERMS
- RInfra-led Mumbai Metro One Private Ltd is looking at options to reduce its debt
- Currently, the company is paying around 11% interest on the debt, higher than 9-9.5% for a debt of similar tenure
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In the view of the new resolution framework that is believed to be more decision-oriented and time-bound, RInfra-led Mumbai Metro One Private Ltd (MMOPL) is looking at options to reduce their debt, sources said. MMOPL's debt stands at around Rs 1,200 crore.
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