Subhiksha says debt rejig on; bankers say hogwash

R Subramanian, founder and MD of the defunct retail chain Subhiksha Trading Services, has claimed the current debt restructuring is about to conclude successfully
and that the company is on the cusp of a new life.

However, banking sources dismissed the idea, calling Subramanian’s claim “hogwash”.
“12 of the 13 bank lenders together with the three major shareholders are presently thrashing out the contours of the debt restructuring as well as the funds infusion into the company to revive operations. The contours of the revival plan of the company have been agreed,” Subramanian said in a statement.

“It is all hogwash,” said the head of corporate finance division of one of the biggest lenders to Subhiksha.

Preferring anonymity, he said that banks are resigning themselves to writing off the investment. Another official with another bank which is part of the debt restructuring process also concurred. “We are not aware of any of the banks involved coming forward to advance more money,” the latter said.

Interestingly, Subramanian said banks are coming round to the view that the fresh capital that has to be injected into the chain, estimated to be around Rs 300 crore by Subramanian, should take the form of equity, rather than debt.
“It has been agreed between the various stakeholders that considering the existing debt levels the entire revival will be equity financed so as to put the company on a sound footing,” he said.

This is the latest in a series of claims and counter-claims by the firm and its creditors since a liquidity crunch forced the firm to shutter its estimated 1,600 shops at the beginning of the year.

Among the banks which lent around Rs 800 crore are HDFC Bank,  HSBC, Bank of Baroda, Yes Bank,  BoI , Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Development Credit Bank and Federal Bank.

The debt restructuring process will meet its statutory deadline by the end of July.