Anil Ambani-promoted Reliance Infrastructure Ltd shares surged as much as 16% in intra day trade on Thursday, after lenders to the firm signed the inter-creditor agreement (ICA).
Reliance Infrastructure said all its 16 lenders have signed the ICA for the resolution of the company’s debt, which meets the conditions set by the Reserve Bank of India (RBI) circular of June 7, 2019 on resolution of non-performing assets (NPAs).
The RBI circular says that an inter-creditor agreement, which is signed by lenders representing 75% of the value of outstanding loans or 60% by the total number of banks, is binding on all the lenders to the company.
An inter-creditor agreement is a contract concluded between the debtor and all the creditors when the debtor is no longer able to pay its dues. This agreement pays for some part or percentage of the loan extended by each of the lender, and the debtor receives a final discharge for the remaining amount due. The debtor can make a new start and the creditors receive their payments immediately.
In line with the conditions of the RBI circular, the resolution plan of Reliance Infrastructure has to be implemented within 180 days.
Reliance Infrastructure has now achieved standstill for 180 days as per the ICA, the company said, adding that it was confident of implementing the plan well before the deadline based on advanced progress of its various asset-monetisation initiatives.
Reliance Infrastructure has already announced the sale of Delhi-Agra Toll Road for an enterprise value of Rs 3,600 crore. With this single transaction, the debt of Reliance Infrastructure will reduce by over 25% to just over Rs 4,000 crore, the company said.
Reliance Infrastructure also plans to monetise its marquee 700,000 square feet Reliance Center in Santacruz by way of long-term lease. With this, the company aims to be debt-free in 2020.
Reliance Infrastructure shares were trading at Rs 51, up 10.75%, on BSE at 2:55 pm on Thursday. The stock price has fallen over 85% year-to-date in 2019.
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