Wednesday, November 25, 2009

Vishal Retail In Debt Talks After Loan Default



In the second such move by a major Indian retailer this year, Vishal Retail has announced that is will under a corporate debt restructuring (CDR) process, after failing to repay its loans. The announcement comes just 10 months after discount chain Subhiksha said it would begin a similar process – one that has still not been completed.

Vishal Retail, which operates hypermarkets across India, said it will look to restructure Rs.7.3bn ($157m) of loans. According to CDR rules, the entire process has to be completed within 120 days, during which period no creditor can take a unilateral action against the company.

Reports said the group is looking for a moratorium on payment of both the interest and principal amount it owes to lenders. The company has an annual interest payment obligation of Rs.1.0bn ($21.5m). Group President Ambeek Khemka told a local TV station, “Lenders are very sure that the company will be in a position to service its debt. However, there would be some kind of sacrifices which the lenders might have to make. The company would have to ensure that the business is running by bringing down the financial cost.”

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