The ongoing corporate debt restructuring of cash-strapped Subhiksha Trading Services may be extended by another two months.
The original finalisation date was April 31. At a hearing on the issue at the High Court in Chennai, counsel for ICICI Bank, which leads the consortium of banks handling the recast, said it was negotiating with others on an extension.
The next hearing on extricating the Chennai-based retail chain from its present quagmire will be on April 17. The court is presently considering a proposed merger of Subhiksha with Blue Green Constructions and Investments. Blue Green is listed on the Madras Stock Exchange.
Subhiksha's lenders, including 12 foreign and Indian private sector banks, have sought a review of its balance sheet to speed up the needed raising of funds. According to sources, Ernst & Young has been appointed to audit the chain's accounts.
Subhiksha requires another advance of Rs 300 crore (Rs 3 billion) to put it back on stream and to pay its suppliers, pay salary dues and to meet its working capital requirements.
The company has a net worth of Rs 260 crore (Rs 2.6 billion) on an equity base of Rs 32 crore (Rs 320 million) and a gross debt of about Rs 750 crore (Rs 7.5 billion).
R Subramanian, Subhiksha's managing director, had earlier said the business was viable, but cash-starved, and the CDR would help ensure revival.
Once the CDR was through, he had said, the company might have to take the equity route to raise money.
The proposed merger with Blue Green was announced last year by Subramanian and was received quietly by the stake holders. However, when the extent of Subhiksha's problems became clearer, many investors, including ICICI Venture and the Azim Premji-owned Zash Investments, objected.
They said they hadn't been told of Subhiksha's grim financial picture. Meanwhile, Kotak Bank which has lent Rs 40 crore (Rs 400 million) to Subhiksha, said it was not a part of the CDR programme.
