Patel Engineering completes S4A

Patel Engineering rose 4.5% to Rs.96.05 during the morning session, clocking a volume exceeding 2.5 lakh shares. It is now quiet on the counter with the stock price just about holding on to the green.

Yesterday after market closure, the company announced that it has completed implementation of S4A scheme.

This is the ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’ introduced by RBI for resolution of bad loans of large projects, covering projects which have started commercial operations and have outstanding loan of over Rs.500 crore. The purpose of the S4A is to strengthen the lenders’ ability to deal with stressed assets and put real assets back on track by providing an avenue for reworking the financial structure of entities facing genuine difficulties. The scheme is an optional framework for resolution of large stressed accounts.

Patel Engineering has taken quite a few steps; it has transferred 51% stake in Hitodi Infra, a wholly owned subsidiary to Eight Capital for debt of Rs.2000 crore. The change of management has also be done.

The company has also transferred 5 acres of property in Jogeshwari to Lodha Developers  for debt of Rs.376 crore.

With these steps, the total debt of the company now stands reduced by Rs.2376 crore.

The company has successfully implemented the S4A Scheme, subsequent to which debt has been converted to Optionally Convertible Debentures of value aggregating to Rs 688.54 crore.

As part of the scheme, the promoters of the company have infused Rs 75 crore as interest free unsecured loan by raising loan against pledge of their share aggregating to 13.37% of the total equity share capital of the company.

The promoters have also pledged share held by them to the extent of 10% of the total equity share capital to a trustee appointed by the lenders out of the which pledge on shares equivalent to 3.93% of the total equity capital of the company has been invoked and credited to the lenders as part of the said S4A Scheme.