Vijay Sheth, promoter of Great Offshore (GOL), who faced margin calls from lenders, has

RELATED ARTICLES Fitch cuts Japan debt rating, outlook negative France, Germany want to keep debt-stricken Greece in euro zone Air India seeks proposals to raise up to $800m in debt

managed to ward off immediate threats of takeover. Sheth raised "some expensive debt" from the market and paid off dues — around Rs 200 crore — to Infrastructure Leasing and Financial Services (IL&FS), one of the lenders, after his company’s share price dropped to Rs 266 levels from its 52-week peak of Rs 1,150.

Top IL&FS official confirmed to Financial Chronicle that Sheth had paid up all the debt. "The GOL promoters had failed in certain covenant. We had asked them to either fulfill the covenant or pay up the debt. They have paid up the entire outstanding," said an official, requesting anonymity.

IL&FS had lent Sheth money to buy stake from his cousins subsequent to the formal spit of the erstwhile Great Eastern Shipping Company (GE Shipping) in 2005. Two financial investors — GE Capital and IL&FS — had provided debt to Delta Housing Company, an investment company owned by Sheth, to aid the buyout, through a share-financing.

However, Sheth had paid off GE Capital by raising money from Motilal Oswal, last year.

The recent woes for Sheth began when GOL share prices dropped drastically to Rs 240-260 levels, bringing the value of the collateral to around Rs 150 crore, much below the loan amount.

When the share-financing deal was struck in June, 2007, the share price was hovering around Rs 850, valuing Sheth's holding at around Rs 500 crore.

Soon after he faced margin calls from IL&FS last month, a few suitors – Rishi Agarwal of ABG Shipyard, Atul Punj of Punj Lloyd and Venugopal Dhoot of Videocon – sensed a great opportunity as GOL became an easy takeover target, and bought up to two per cent stake in it. All these promoters have, however, denied any plans to take over the compnay, but investment bankers close to GOL said their plan was to buy out 14 per cent stake held by Sheth, which, along with their 2 per cent stake, could have triggered the open offer.

"Vijay Sheth has now bought time for himself. Since the fresh debt raised being expensive, this can not be a long-term arrangement. The promoter may have to either sell part stake to private equity players or go for a complete sale," said an investment banker.

Sheth, who is also company's vice-chairman and managing director, was not available for comment. A GOL spokesperson refused to comment on the issue, saying that the matter is not related to the company.

When contacted by Financial Chronicle, a Sheth family member denied any takeover move. "We have invested around $900 million in Greatship India, a subsidiary of GE Shipping, floated for offshore services, after GOL was split off in 2005. Greatship, which is a rival to GOL, now owns and operates a diverse fleet of 25 offshore supply vessels and two rigs – one owned, and the other, taken on bareboat charter. We don't want to intent any more offshore assets now, even though the valuations are compelling," he said, adding that the shipping/offshore markets are facing a tough time in the face of a global demand slowdown.

Vijay's cousins — Bharat Sheth and Ravi Sheth — brothers and promoters of GE Shipping, also own five per cent in GOL. Some other family members hold another 5 per cent in GOL, which they have continued to hold after the de-merger.

Great Offshore/BSE Rs 257.45

NSE Rs 257.05

GE Shipping/BSE Rs 161.04

NSE Rs 162.2