Lenders' holding in ABG Shipyard rises to 49% as ICICI converts debt

Mumbai: Shares of ABG Shipyard rose 9.2% after it announced that private lender ICICI Bank had acquired 11% stake in the company by converting its debt into equity. Lenders now own 49% stake and are actively scouting for an investor to sell their stake. State Bank of India and Punjab National Bank now own 7% each, said sources.

After ABG Shipyard failed to repay dues and infuse capital to sustain operations, lenders appointed investment banker Rothschild to find a new promoter who would buy their 49% stake. The company has outstanding loans worth Rs 16,400 crore.

ICICI Bank has acquired 11.08% stake by exercising its option of converting CCPS (compulsorily convertible preference shares) into equity .Sources said as per the Corporate Debt Restructuring package, debt worth `450 crore was converted into CCPS a couple of years ago. These CCPS have now been converted into equity at Rs 41 per share, sources added. The conversion is as per the Sebi formula of taking the average price between February and July of this year, which works out to be Rs 41. Since the stock closed at Rs 33.5 on Wednesday, banks will have to make a significant mark-to-market provisions on these shares.

Lenders had initiated debt restructuring involving conversion of debt into equity . However, shareholders were unable to pass the resolution at an annual general meeting since the 210 days within which the shares had to be converted into equity had lapsed.

Other lenders include Andhra Bank, Bank of Baroda, LIC and Syndicate Bank, which own a combined 8% in the firm as on June 2016.