A consortium of 15 lenders led by State Bank of India (SBI) will likely add to its exposure to the highly-leveraged Essar Steel India, lending it an additional Rs 6,000 crore. Essar Steel, promoted by the Ruias, has already borrowed close to R30,000 crore. Essar group, in turn, will bring in Rs 2,000 crore by way of promoters’ contribution. Of the R6,000 crore, the company will use around R2,000-2,500 crore to repay group companies from whom it borrowed to pay banks. Bankers defend the fresh exposure saying without this, Essar Steel would end up in the corporate debt restructuring (CDR) cell. They point out that although the company has not defaulted, it might have trouble servicing its debt. “It’s better to give them the additional amount than restructuring the account since that would mean taking a hit on the interest,” a senior banker explained. The banks plan to take this fresh exposure to the steel company at an interest rate of 12.50%. A restructuring allows the bo...
Pre IPO | Private Equity | Unlisted Shares