GTL Creditor Said to Delay Seizure of Stake Amid Debt Revamp

By George Smith Alexander and Anto Antony - Aug 4, 2011

A lender to India’s GTL Ltd. (GTS) agreed to delay a plan to seize shares pledged by the company’s owners as collateral while creditors try to revamp its $1.1 billion debt, said two people with direct knowledge of the talks.

State-run lenders to GTL, a maker of telecommunication equipment, persuaded Syndicate Bank not to exercise its rights to the shares, the people said, declining to be identified because the discussions are private. Controlling shareholders of GTL have pledged more than 20 percent of the company as collateral for a loan from the Bangalore-based Bank, they said.

GTL’s lenders moved to take control of the Mumbai-based company after owners failed to pledge more shares following an 83 percent decline in the stock price in two months. The company on July 27 said ICICI Bank Ltd. (ICICIBC) had taken over a 29 percent stake. GTL has hired SBI Capital Markets Ltd. to restructure the debt, the company said in a June 27 statement.

“The bankers’ consortium will work with the borrower to chart out a way in which the loans can be recovered,” K R Kamath, chairman of Punjab National Bank, India’s second-largest state-run lender and a creditor to GTL, said in an interview yesterday.

The company, controlled by Manoj Tirodkar, had its credit rating lowered to junk by Credit Analysis & Research Ltd. on June 29. The credit assessor cut the rating five levels to BB+ from A, according to the statement.

GTL spokesman Vikas Arora declined to comment on the debt revamp process. Ravi Chatterjee, executive director at Syndicate Bank couldn’t be reached at his office in Bangalore and didn’t respond to an e-mail.
‘Extraordinary Fall’

ICICI Bank lent 6 billion rupees ($135 million) to GTL, said another person who declined to be identified because they weren’t authorized to speak to the media. GTL rose 1.7 percent to 70.65 rupees at 10:06 a.m. in Mumbai, valuing ICICI’s stake in the company at 2 billion rupees. The shares are the worst performing stock in the BSE200 index this year.

IFCI Ltd. (IFCI), a state-owned lender, sold 200,000 shares of unit GTL Infrastructure Ltd. (GTLI), pledged by GTL, after the company’s shares plunged 56 percent since June 16. IFCI seized ownership of 18 percent of GTL Infrastructure, according to a filing by GTL on July 21.

GTL and GTL Infrastructure, which has about 100 billion rupees of debt, on June 21 asked the market regulator to investigate the “extraordinary fall” in its stock price, according to a statement.
Sell Assets

“A strategic investor would be the most sensible for GTL Infrastructure,” said G.V. Giri, an analyst with IIFL Capital Ltd. “The buyer can add value by bringing in more customers.”

GTL Infrastructure rose 1.6 percent to 14.43 rupees in Mumbai, its biggest gain since July 29.

GTL has over 20 creditors including Standard Chartered Plc (STAN), which invested $300 million in the company’s bonds, said the people. Standard Chartered’s Indian unit took an additional $53 million charge in the three months ended June 30 because of “an India bond exposure,” the bank said in a statement today, without elaborating.

Arijit De, a spokesman for Standard Chartered in Mumbai, declined to comment on the bank’s “exposures to any specific counterparty.”

GTL may sell property and other assets to pay its debt, the people said. Global Holding Corp. owns 52 percent stake in GTL. GTL on July 19 said that 51.92 percent of the shares in the company held by Global Holding have been pledged as collateral to lenders.

To contact the reporters on this story: George Smith Alexander in Mumbai galexander11@bloomberg.net. Anto Antony in New Delhi at aantony1@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net Sam Nagarajan at samnagarajan@bloomberg.net;
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