Varun Shipping jumps 10% on debt recast news

Shares of Varun Shipping rose 10 percent after a news report in Mint said that the company has recast its Rs 2,000 crore debt.

In order to raise cheaper dollar loans, the company transferred some of its ships to its overseas arms, which used them as collateral to raise the funds, the report said.

[caption id=“attachment_373258” align=“alignleft” width=“380”]  Reuters[/caption]

Though an official with a ship management firm termed the exercise an “accounting gimmick”, a bank executive said it is a “good thing”, according to the report.

“As lenders, we have no problem in giving them fresh loans as they have not defaulted on their existing loans and have duly repaid their old loans. Besides, there is a clear business case for the new entity and the ships are in demand,” the executive was quoted as saying in the report.

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The transaction is a first of its kind in the country, it said.