Lenders to Maxis-controlled Aircel to convert debts into equity

KUALA LUMPUR: Aircel Ltd of India, controlled by Malaysian tycoon Ananda Krishnan, has entered a strategic debt restructuring (SDR) process after lenders led by the State Bank of India agreed to convert debt into equity, India’s Economic Times reported.

The State Bank of India told the Delhi High Court on Monday that Aircel should be allowed to proceed with a planned debt restructuring. The court allowed the restructuring but said any sale or restructuring of Aircel’s assets would need to be approved by it.

ET said, quoting unnamed people familiar with the matter, that the banks would now take shares in Aircel to replace their loans. They could recover their dues in an eventual sale of assets or of the company, it added. However, it is unclear if the banks will take a majority stake in the company.

Aircel has about Rs15,500 crore (RM9.48 billion) of borrowings on its books, with sustainable debt estimated at Rs 5,500 crore, which would entail a recast of Rs 10,000 crore.

ET had earlier reported that Maxis Bhd, Aircel’s parent company, was likely to pump in up to US$500 million into the company. It said this infusion was contingent on the SDR loan conversion going through.

Aircel has been trying to invoke SDR to reduce its debt burden since talks to merge with Reliance Communications failed at the end of September. However, the lenders had earlier been reluctant because Aircel was embroiled in a corruption suit in the Supreme Court of India, ET said.

It added that Aircel did not respond to its queries and that the State Bank of India declined to comment.

With 87.5 million wireless subscribers, ET said, Aircel had a 7.5% market share across India at the end of November and that it might return to profitability after discontinuing services in loss-making regions. -FMT