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.