New Delhi: The consortium of lenders led by IDBI has given its approval to the corporate debt restructuring (CDR) exit plan of Reliance Defence and Engineering Ltd (RDEL), a subsidiary of Reliance Infrastructure (RInfra), according to informed sources. The lenders have also given their go-ahead for the implementation of the refinancing scheme of RDEL.
Both the proposals were presented to the CDR Empowered Group’s (EG) meeting on March 29 and approved by the requisite majority of CDR lenders.
The lead lender of the consortium IDBI has also written to the Ministry of Defence confirming the approval granted to RDEL’s CDR exit plan and refinancing scheme.
The confirmation from IDBI to Ministry of Defence paves the way for RDEL to participate in all the future contracts of the Navy, the sources said.
Now, RDEL and L&T are the two private sector shipyards who will compete with government-owned shipyards for the prestigious contracts for making submarines, Landing Platform Dock (LPD) and corvette.
As per the refinancing scheme approved by CDR EG, about Rs 6,800 crore of RDEL debt will be refinanced with maturity of about 20 years and lower interest rate.
Exiting CDR is expected to provide increased financial flexibility to the company. RInfra has increased its shareholding in RDEL to nearly 31 per cent. RDEL’s current order stands at over Rs 5,300 crore from Navy, Coast Guard and commercial vessels.
RInfra had acquired Pipavav Defence and Offshore Engineering Co in March 2015. This was later renamed as Reliance Defence and Engineering.
Immediately after acquiring Pipavav, Reliance Group had announced its plans to exit CDR. At that time, the company said in a statement that exit from the CDR would lead to improved financial flexibility and increased business opportunities for the shipyard.
The Reserve Bank of India had given its nod for RDEL to exit the CDR package.