Banks have agreed to write off Rs 200 crore of Maytas Infra’s outstanding debt

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as a one-time settlement and convert Rs 225 crore of debt into preference shares and Rs 75 crore of debt into equity as part of a corporate debt restructuring (CDR) plan, which will give them about 5 per cent stake in the company.

The remaining Rs 800 crore of debt would be restructured with varying tenors and rates of interest. ICICI Bank is the lead bank for the restructuring.

“The stake for each bank will be given in accordance with the exposure each bank has to the company. Writing off a part of the debt and then converting the debt into preference shares has helped the company reduce its debt,” said Milind Patel, chief operating officer of financial services at IL&FS, the single largest owner of Maytas Infra with 37.1 per cent stake.

Maytas Infra is executing projects worth Rs 7,000 crore.

The provisional approval for the CDR package comes close on the heels of West Asian Construction Company, promoted by Saudi Binladin group, acquiring a 20 per cent stake in Maytas for about Rs 300 crore.

“The company has also agreed to bring in some more equity infusion. Banks will finalise the package on June 25. This is a provisional approval, but there is unlikely to be any further changes,” said a member of the CDR cell.

According to a top official of State Bank of Hyderabad, one of Maytas Infra's lenders, the company opted for a one-time settlement of debt with banks that were not willing to join the CDR package. Apart from this, banks could also finance interest payment through funded interest term loan (FITL) till the company becomes financially capable of paying interest for its debt, and unsecured loans could be converted into working capital loan.

Major lenders to Maytas Infra are State Bank of India, IDBI Bank, State Bank of Hyderabad, Indian Overseas Bank, Punjab National Bank, HDFC Bank, Axis Bank, Standard Chartered Bank, among others.

“The approval of the CDR package enables Maytas Infra to bring overall debt in the company to a sustainable level and at a reasonable pricing. The package will support Maytas Infra in its ongoing strategic and operational initiatives to strengthen the business model and cash flows,” the company said in a statement.

“This is through a mix of one-time settlements with a few banks, conversion of debt into preference shares and restructuring the composition and structure of the debt. At the same time, banks have opted to convert part of the debt into equity to partake in the economic benefits from the turnaround of the company,” the statement added.