ABG Shipyard Plunges 20% on Loan Repayment Worries

ABG Shipyard shares fell as much as 20 per cent on Thursday to hit its lowest level in 52 weeks of Rs 137.85 after the company said that it is under the framework of a corporate debt restructuring (CDR) scheme.

The ship building company, while responding to clarification sought by the Bombay Stock Exchange or BSE, said, "We wish to advise you that we are working within the framework of Corporate Debt Restructuring (CDR) Scheme and our principal repayment of loans are yet to start."

Analysts say if a company faces difficulty in servicing its debt then it goes for restructuring, under which banks either reduce the interest rate or extend the tenure of repayment. In some cases, debts are also converted to equity, they say.

A few days ago, media reports suggested that ABG Shipyard, which restructured its debt worth Rs 11,000 crore, missed repayments of the restructured loan.

The company's communication was in response to a newspaper report published on May 15, 2015. Since then, the shares of ABG Shipyard have fallen 22.8 per cent.

At 2:53 p.m., shares in ABG Shipyard were trading over 12 per cent lower at Rs 150.50 apiece on the BSE.