Panel approves Bajaj Hindusthan Sugar’s debt recast

An Indian overseeing committee has approved a proposal submitted by a group of lenders, led by State Bank of India, to restructure an ~8,285 crore ($1.3 billion) debt of Bajaj Hindusthan Sugar Ltd.

According to the plan, the company's debt of ~4,789 crore will be considered as "sustainable", while the rest will be treated as "unsustainable", India's top sugar maker said in a statement to stock exchanges on Friday. A loan is considered as sustainable when a company is able to service it from its cash flow.

The debt restructuring was done under the Reserve Bank of India's Scheme for Sustainable Structuring of Stressed Assets, or S4A. It allows banks to cut the debt burden of borrowers by as much as 50 per cent, provided lenders are convinced that the remaining loan can be serviced from company cash flows. The plan also allows a dilution in shareholdings. The promoters of Bajaj Hindusthan Sugar will cut their stakes to 15.43 per cent from 26.02 per cent by selling a part of their shareholdings to the lenders. Of the company's unsustainable debt, ~3,483 crore will be converted into optionally convertible debentures, the statement said.

Bajaj Hindusthan Sugar is seeking approvals from its shareholders and individual lenders, according to the statement. It posted losses in five of the last six quarters, according to data compiled by Bloomberg.