Promoters of debt-laden Bajaj Hindusthan Sugars will sell 10.6 percent stake to lenders to settle Rs 3,500 crore of bad debt as per a resolution plan approved by the RBI's overseeing committee.
Bajaj Hindusthan, which has 14 mills in Uttar Pradesh with cane crushing capacity of 1.36 lakh tonnes per day, has a debt of nearly Rs 8,300 crore, of which nearly Rs 3,500 crore has been classified as "unsustainable" in the corporate debt restructuring scheme.
In a BSE filing today, Bajaj Hindusthan said that "the 'S4A Resolution Plan' proposal submitted by the lead bank (SBI) on behalf of Joint Lenders' Forum (JLF) for the company to Overseeing Committee (OC) have been considered and approved for implementation."
Out of total debt of Rs 8,284.59 crore considered under this scheme, the sustainable debt is Rs 5,789.35 crore and unsustainable Rs 3,495.25 crore.
RBI's S4A (Scheme for Sustainable Structuring of Stressed Assets (S4A) framework stipulates dilution in promoters' shareholding, at least in the same proportion as that of unsustainable to total debt.
"Accordingly, the promoters shall dilute their shareholding from the current level of 26.02 percent to 15.43 percent by way of sale of a part of its shareholding to the JLF members," the filing said.
For unsustainable debt, a portion of Rs 12 crore will be adjusted against the sale consideration payable by the JLF members to the promoters towards dilution. The balance Rs 3,483.25 crore would be converted into optionally convertible debentures (OCDs).
The promoters would have the right of first refusal over the equity shares/OCDs held by the JLF lenders.
For the sustainable debt portion, the interest and principal obligations of term loan and working capital will continue as per the existing repayment schedule.
Debt servicing will be made out of cash flows from operations, without any change in terms of repayment.
To implement this scheme, Bajaj Hindusthan said it has initiated necessary steps that would broadly cover final approval by individual JLF lenders, execution of S4A documents with lenders and necessary approval from the shareholders.
"Once implemented the scheme would help the company to reduce the interest cost to the extent of interest on the unsustainable portion of its debt," the company said.Besides sugar, the Shishir Bajaj-led Bajaj Group has interests in power, ethanol, real estate, personal care products and infrastructure.