Maytas board approves corporate debt restructuring package

29 Apr 2009,

HYDERABAD: The board of cash-strapped Maytas Infra, promoted by disgraced founder of Satyam Computer Services B. Ramalinga Raju and his family, Wednesday approved a draft corporate debt restructuring (CDR) package and recast the management by appointing two presidents.

The two-day meeting of the board, chaired by K. Ramalingam, approved the draft CDR package, and is considering appointment of State Bank of India (SBI) Capital Markets for the purpose.

A representative from the SBI, a large lender to company, is already on the project management committee formed by the board recently to oversee the execution of pending contracts. Ravi Parthasarathy, chairman of Infrastructure Leasing and Financial Services, which has 14.5 percent stake in the firm, is also on the committee.

The CDR package is aimed at saving the firm from bankruptcy by reorganizing outstanding dues to financial institutions. The firm is also trying for fresh infusion of funds to complete ongoing projects.

A company statement issued at the end of the meeting said the board reposed full confidence in the revival plan and restructuring of Maytas Infra. The revival plan also has the support of the central government, it said.

"The board carefully analysed the financial position, current order book, cash flow, HR and other issues related with the restructuring of the company," the statement said.

The six-member board, including four government-appointed members, also appointed two presidents - C.S. Bansal and Rajendra Nimje.

The board, however, took no decision on appointing a new chief executive officer to replace Teja Raju, the son of Ramalinga Raju, who is now the acting CEO.

Ramalingam also met Andhra Pradesh Chief Secretary Ramakanth Reddy and apprised him of the company's business plans.

The meeting was significant as Maytas last month sought more time for achieving the financial closure for the proposed Rs.122-billion Hyderabad Metro Rail Project.

The mega project is among several that are in the limbo after the company plunged into a crisis following Ramalinga Raju's admitting to committing a Rs.78-billion accounting fraud in Satyam.

The confession followed his botched attempt to acquire Maytas Infra and Maytas Properties for Rs.80 billion last December.

The allegations that Raju diverted part of the scam money into his family firms created more problems for Maytas as it lost some projects in other states.