Tower Operator GTL Infrastructure’s Loan Recast On Track

Shareholders of mobile tower company Chennai Network Infrastructure Ltd. (CNIL) have agreed to issue shares to lenders as part of a strategic debt restructuring scheme of its promoter GTL Infrastructure Ltd.

GTL Infrastructure had sought debt recast in September last year. The board proposed converting debt into equity shares for lenders, merging the company with CNIL, and then eventually selling the combined entity to a new promoter. The conversion of equity will be completed before April 17, it said in a stock exchange filing.

The tower operator had a total debt of Rs 4,500 crore as of September.

The two companies, along with GTL Ltd., are part of Global Holdings Pvt. Ltd. GTL Ltd. is a promoter in both GTL Infrastructure and CNIL.

The merger with CNIL was an obligation to a prior corporate debt recast that GTL Ltd. had undertaken in 2011. The financial performance of the company failed to improve even after it repaid about Rs 6,000 crore to lenders. This was due to a mix of reasons from cancellation of second-generation licence by the Supreme Court in 2012 to the non-availability of capital for modernisation, GTL Infrastructure said.

Chennai Networks Infrastructure is one of the most valuable assets for GTL Infrastructure, since it was formed to acquire 17,000 towers worth Rs 6,082 crore from Aircel in 2010. These towers contribute a significant chunk of CNIL’s revenue. Overall, GTL Infrastructure has around 28,000 towers across India.

The Reserve Bank of India introduced the strategic debt restructuring scheme in 2015 for stressed companies, which envisaged transferring equity shares of such firms to lenders to compensate their losses. It also provided for debt to be converted into equity shares and issued to the lenders, who may then hold on to the shares till a prospective buyer appears.

So far, 15 companies have invoked the SDR scheme since its inception, according to Religare Institutional Research.