High net worth individuals and family offices together have put their might behind beleaguered ship building company Bharati Shipyard by contributing about Rs 500 crore for the company's revival. HNIs put in money into the Edelweiss Stressed and Troubled Assets Revival Fund (E-STAR) to help revive the company.
The Edelweiss asset reconstruction company (ARC), which is putting in place a revival package for the company, also plans to set up a separate structure to ring fence the company from the slew of litigations filed in the Bombay High Court by company's unsecured lenders.
Earlier this year, a clutch of creditors including Life Insurance Corporation (LIC), Shipping Corporation of India and IDBI Capital Market filed winding-up petition against the company in the Bombay High Court.
Siby Antony, director and CEO, Edelweiss ARC said, "We have raised Rs 500 crore from Indian HNIs and family offices to revive Bharati Shipyard. We intend to create a separate structure for the company to ring fence it from the slew of litigations from vendors and some institutions."
The company has a robust order book of 65 half built ships and expects to bag some defence deals to build some war ships from the government, which is expected to resurrect the fortunes of the company.
The company has been facing liquidity problems since 2011. The global financial crisis also hit the company hard with 70% of its customers being Europeans.
Problems for the company began after it acquired offshore and oil field services firm Great Offshore shipping company through a debt funding of over Rs 3000 crore. Soon after the takeover, the economy also went into a tailspin with the global financial crisis having its impact on most global economies and the orders of the company did not grow fast enough to repay the debts on time.
Bharati Shipyard continued to report losses of Rs 879.36 crore in FY14, higher than the Rs 491.91 crore losses it reported in FY13. The account was referred to the corporate debt restructuring cell in December 2011 and lenders agreed to recast the company's loans of Rs 5,800 crore in April 2012 with a moratorium on interest for 18 months, at a reduced interest rate of 11%. However, the company remains in the red; net losses in Q3 FY15 were Rs 98.8 crore on revenues of Rs 2 crore.
Asset reconstruction company Edelweiss bought about 60% of the total bank loans by value to drive the restructuring process. The company has about Rs 5300 crore of debt on its books.
