Canara Bank has filed to initiate insolvency proceedings against GTL and its unit, GTL infrastructure, claiming a default of Rs 458.92 crore and Rs 541.49 crore respectively, which will mark another battle for dues in a debt laden industry.
“Canara Bank has filed an application for initiation of Corporate Insolvency Resolution Process (“CIRP”) against GTL Limited (“the Company”) allegedly claiming a default of INR 458,94,92,120.83 crore in aggregate,” GTL said in a regulatory filing on Monday.
Debt laden GTL, in its statement, said it has been facing the brunt of consolidation in the telecom industry with the folding up of companies and mergers and that Canara Bank’s proceedings will have an adverse effect on the firm and its shareholders. Shares of GTL closed at Rs 5.86, down by 2.82% on BSE on Monday.
“The Company strongly believes that the actions of Canara Bank are against the interests of all stakeholders, including the other lenders and the minority public shareholders and is value erosive,” the company said in the filing. It added that the firm has approached “appropriate judicial authorities to protect its interest”.
In a separate stock exchange notice, telecom tower company GTL Infrastructure denied the bank’s allegations and said its debt as of March end has been reduced to Rs 275.48 crore. The infrastructure company said that Canara Bank’s allegations are “illegal” and “unjustifiable” and the firm was regular in its payments and principal installments after the implementation of strategic debt restructuring.
GTL Infrastructure whose shares rose by 4.41% to Rs 1.42 a piece on Monday said it will contest these allegations. The company said that Canara Bank acted contrary to other secured lenders.
“The Company has initiated appropriate legal proceedings before the relevant judicial authorities to contest the contention of occurrence of a default, which proceedings are currently subjudice,” GTL Infra said. It added that it has already obtained a stay against the insolvency proceedings from the appropriate judicial forum and as a result, the process has been already stayed pending the outcome of the above proceedings.
GTL, on its part, said it has been a “victim” of circumstances that have adversely impacted the industry for about a decade and the final blow was when the wave of recent consolidation happened.
“The last of such circumstances occurred in the last 12 months which saw the unprecedented shut down of three major operators namely, Aircel Limited, Tata Teleservices and Reliance Communications as well as the forced consolidation of Vodafone & Idea Cellular and Telenor & Bharti Airtel. These events, which have been entirely beyond the control of the management, have had a material and adverse impact on the operations and prospects of the company”, said the company.
The infrastructure company said that despite the headwinds, it had submitted many “proactive proposals” for settlement of its debt and although initial in principle approvals were received from lenders, the consolidation in the sector led to revision of the proposals.
The firm said its revised proposal was being considered by the lenders and it believes that its settlement proposals, which involve an effective sale of all its businesses, assets and investments, will fetch more value for the lenders than the insolvency proceedings.
“Towards this end, the company has been actively pursuing settlement with lenders and has already been reached settlement with lender over 40% of lenders in value,” GTL said.
Source: Economic Times