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Decision process Decisions in the CDR system are taken on basis of super majority where 75% of lenders by value and 60% of lenders by number have to agree.

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Presentation on theme: "Decision process Decisions in the CDR system are taken on basis of super majority where 75% of lenders by value and 60% of lenders by number have to agree."— Presentation transcript:

1 Decision process Decisions in the CDR system are taken on basis of super majority where 75% of lenders by value and 60% of lenders by number have to agree. The mechanism is based on Inter Creditor Agreement signed by all member Banks and Debtor Creditor Agreement signed by the Borrower. 1

2 Stand-still Period Lenders & borrowers not to initiate or proceed with civil suit Not to approach any authority for any relief Directors not to resign. Documents stand extended. Status quo ante for asset classification if package approved & implemented within 120 Days. 2

3 Outline of the Process Submission of Flash Report – scrutiny to ensure benchmarks and admission of the case by Empowered Group. Appointment of Monitoring Institution (MI) & members of Monitoring Committee (MC) Conduct of Joint Lenders Meet (JLM) for finalization of Restructuring Package Approval of Final Restructuring Package by EG. Execution of Master Restructuring Agreement and Trust & Retention Agreement. 3

4 Timeline Initial scrutiny for Flash Report max 30 days Approval of Flash : Next EG Meeting Approval of Final Package 60/ 90 days Issue of LOA: After confirmation of minutes Approval by individual lenders : 45 days Package Implementation by all : 120 days 4

5 Components of Restructured package Within overall regulatory guidelines applicable, each package is tailor made to suit the corporate needs. Generally the package may involve concessions in rate of interest, modification in repayment schedule, carving out irregularity in Working Capital into WCTL, Funding of Interest, conversion of debt to equity or other debt instruments. 5

6 Additional Finance Additional Finance, if any, to be provided by CDR lenders or all lenders on pro rata basis. Preferential claim with respect to cash flows in respect of additional exposures. Waterfall Mechanism is embedded in the MRA and TRA Asset classification benefits for additional exposures as per extant regulatory guidelines. Sharing additional finance compulsory only in Category I cases. 6

7 Requirements from Borrower Enhanced security by way of Guarantee of promoter, Pledge of shares. Promoters contribution 20% of lenders sacrifice or 2% of restructured debt, whichever is higher. Restrictions on expansion, capex, dividends etc. 7

8 Key Financial Benchmarks DSCR :1 Return on Capital Employed – 5 year G sec + 2% Gap between IRR and cost of capital – at least 1% Loan Life Ratio – 1.40 Break-even analysis – in line with industry Industry indicators – EBIDTA, price realization,etc 8

9 Exit from CDR Exit from CDR is triggered on Completion of restructuring period Financial performance of the borrower is 25% more than EBIDTA projections for 2 consecutive years. Upon Exit, Recompense has to be paid by the Corporate for the sacrifices made by the lenders, as per CDR guidelines. 9


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