Lenders transfer ₹1,104cr McLeod Russel debt at discount with 5-yr repayment tenure

Kolkata, Mar 16 (PTI) A consortium of lenders to bulk tea producer McLeod Russel India Restricted (MRIL) has transferred its debt publicity to the Nationwide Asset Reconstruction Firm Restricted (NARCL) for ₹700 crore, representing a 36 per cent haircut, sources stated on Sunday.

The debt of ₹1,104.69 crore has been offered below a 15:85 cash-to-security receipts (SR) construction, with 15 per cent of the consideration to be paid upfront and the remaining 85 per cent by means of SRs over the subsequent 5 years, they stated.

The Swiss problem public sale for the debt transfer of the bottom worth of ₹700 crore obtained no counterbids towards NARCL’s provide on account of extraordinarily poor sentiments in regards to the tea sector, a service provider banker official concerned within the transaction stated.

The ₹700 crore debt deal is seen as considerably decrease than a beforehand tried one-time settlement (OTS) of ₹1,030 crore backed by Carbon Sources, which lapsed on account of an absence of consensus amongst lenders.

McLeod officers acknowledged that the event is a optimistic step that may permit the corporate to barter with solely three debtors—NARCL, JC Flowers ARC, and IndusInd Financial institution—slightly than a dozen banks.

“We’re not out of the woods, however this may assist the corporate get time to show round and keep away from a misery sale of belongings,” an organization official stated, declining to be quoted as a result of sensitivity of the matter.

As of June 30, 2024, McLeod Russel had whole excellent dues of ₹1,461.06 crore, together with debt assigned to a different non-public asset reconstruction firm and Indusind Financial institution which aren’t a part of this transaction.

NARCL is anticipated to work intently with the present administration to restructure the corporate. Nonetheless, no fast feedback have been out there.

Based mostly on monetary due diligence, the lenders anticipated an extra internet restoration of roughly ₹270 crore upon full redemption of the SRs.

McLeod had knowledgeable the bourses that NARCL had taken over the loans of ICICI Financial institution-led consortium which had State Financial institution of India, HDFC Financial institution Restricted, Axis Financial institution Restricted, Punjab Nationwide Financial institution, UCO Financial institution, Indian Financial institution, and RBL Financial institution.

ICICI Financial institution officers declined to talk on the small print.

The corporate’s loans have been categorized as non-performing belongings (NPAs) in October 2019 on account of monetary stress arising from a chronic downturn in tea costs, rising prices, and unrecovered loans prolonged to group entities, notably McNally Bharat Engineering Co Ltd, which is present process insolvency proceedings.

McLeod Russel, promoted by the Khaitan household, operates 31 tea estates in Assam and two in West Bengal, with a saleable manufacturing of 39.19 million kg in FY24 and a workforce exceeding 50,000 staff.