Varun Shipping to split in two

Varun Shipping to split in two

Mumbai: Big changes are inbound for a famous name in Indian shipping. The Bombay High Court has given the go-ahead to Varun Shipping’s business restructuring proposal. The company, which has had severe financial difficulties, will be split into two separate listed entities: Varun Global Limited (VGL) and Varun Resources Limited (VRL). VGL would be tasked to handle shipmanagement and shipping investment business whereas VRL will take care of the shipping business.

Both the hived off companies will be independently listed on the stock exchange. Currently these companies are in the process of completing the formality of allotment of shares.

As part of the scheme, the debts relating to the shipping business have been transferred to VRL, which has restructured its debt through the Joint Lending Forum (JLF) mechanism formulated by the Reserve Bank of India.

As part of JLF package, the company gets a moratorium period of one year with the overall debt repayment spread over eight years. The banks have also agreed to convert their rupee loans to dollars reducing the effective interest rate from 12-13% to 6-7% in US dollar terms.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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