Lenders ask Lanco Infratech’s promoters to reduce stake

MUMBAI: Raos, the promoter family of large infrastructure company Lanco, will have to become minority shareholders and the company will have to go through extensive restructuring if it has to stay afloat. This is part of a reorganisation plan that the Lanco management discussed with banks on Friday evening.

Lanco group, saddled with debt of a little over Rs 41,000 crore, may receive fresh loans of Rs 4,000 crore if it executes the new restructuring proposal. According to the terms laid down by lenders, Lanco Infratech will remain as the listed holding company, while two new entities will be formed — which will house power projects, EPC — while remaining businesses like gas and roads projects will remain as its subsidiaries.

Lanco Infratech did not respond to an email sent by ET on Saturday. At present, the company’s 30-odd lenders are divided on the issue of giving fresh loans. “Some said they are not comfortable giving additional loans if the promoters do not infuse any capital,” said a bank chief who attended the meeting.

“While other lenders argued that a better way to retain the economic value of the project is by providing last-mile funding since most projects are 90% complete.” The lenders believed that the promoters should be replaced if they are unable to infuse capital in the company.

Banks have, therefore, suggested reducing the promoter’s stake to 26% from 70%, while banks will hold 57% in Lanco Infratech. In the meeting, the company officials said Lanco proposes to sell its 1000 mw Anpara power project located in UP for Rs 750 crore. Lenders have, however, vowed to recover every penny from defaulting companies by enforcing their right to recover dues.

The gross nonperforming assets for listed banks have touched Rs 5.91 lakh crore as on March this year, although banks have provided for much of the stressed loans.

Lanco has several special purpose vehicles (SPVs), and it has classified these loans separately for different lenders. During the meeting, the company suggested that Lanco Infratech will hold 26% stake in the power company.

The promoters said that they are in talks with an investor who would take majority stake in the power company which will acquire Rs 5,166 crore debt on its books.

The investor would infuse Rs 150 crore as debt and `550 crore as equity to acquire majority stake in the power company. Three power projects located in Amarkantak, Babandh and Vidarbha would be completed with funds from the new promoter. The company’s shares rallied 12% to Rs 4.92 apiece on BSE on Friday.