A consortium of lenders led by State Bank of India has enlisted the help of Rothschild to find a buyer for a majority stake in India’s ABG Shipyard, which is struggling with millions of dollars in debt.
A new buyer for the majority stake must be found within 18 months, according to usual Reserve Bank of India procedures.
A request for proposal (RFP) for the stake is expected to be tendered to prospective buyers soon, according to India’s Economic Times.
“Lenders have recently converted their debt into equity and they own 49% stake in ABG Shipyard. They wish to further increase it to 51% with a view to work with the company and Rothschild to seek a strategic partner to garnish and exploit full potential of this strategic defence-approved asset,” Dhananjay Datar, the shipyard’s CFO, told the newspaper.
“The asset is good and the company will benefit from all the defence orders that are lined up,” a senior banker said.
The yard owes the lenders Rs 16,000 crore ($2.4bn) in loans, much of which has been converted into 49.15% equity in the company under its strategic debt restructuring (SDR) scheme.
The lenders’ plan to raise their stake was blocked by a unilateral injunction imposed by the Delhi High Court, halting the consortium from changing the company’s capital structure.
The debt-ridden shipyard reported a net loss of Rs 1,710.68 crore ($254.8m) for the first quarter of 2016, considerably more than the loss of Rs 374.86 crore ($55.8m) reported in the same period of 2015.
The yard’s managing director and CEO resigned in May this year.
