(Recasts with company confirmation, changes debt figure in
first paragraph, adds details)
By Neha Dasgupta
MUMBAI, July 27 India's Lanco Infratech Ltd
has started a process to restructure debts totaling 75
billion rupees ($1.3 billion) after economic weakness impacted
the performance of some of its businesses such as power and
engineering and construction.
If the process is approved by its lenders, Lanco would be
the second debt-laden company to go for a major loan
restructuring within nine months, after lenders to wind turbine
maker Suzlon Energy in November agreed to restructure
about 110 billion rupees of its debt.
Lanco, which produces power, builds roads and constructs
residential and commercial buildings, has asked banks to
restructure the debt, a company statement said on Saturday.
The Business Standard newspaper earlier said Lanco had
started discussion with its bankers to restructure debt worth 90
The company, which acquired Australia's Griffin Coal Mining
Co for about $760 million in 2011, said the debt restructuring
would involve Lanco Infratech as a standalone unit and would not
impact any of its units including the Australian business.
Banks bring cases to the so-called corporate debt
restructuring process to negotiate relaxed repayment terms with
Many lenders have expressed worry about loans to the power,
commercial real estate, construction, aviation, textile and
metals sectors, which are among those hardest-hit by slowing
growth and sluggish policymaking that has deterred investment.
"The current adverse macro-economic situation that has been
prevailing in India since last 12 months has affected the
performance of LITL's EPC business as well as the subsidiary
business," the company said referring to the engineering,
procurement and construction business.
"We expect this situation to remain for another 18 to 24
months time," it said, adding the restructuring process will
help Lanco to complete its ongoing projects on time.
Lanco, which had total debt of 336 billion rupees as of the
end of March, posted losses in the last two financial years, as
the weak Indian economy, growing at its slowest in a decade, hit
Project bottlenecks, largely because of problems in
acquiring land, and high funding costs, have also sapped
investment in the infrastructure industry in Asia's
(Writing by Sumeet Chatterjee; Editing by Robert Birsel and