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YES Bank classifies Carnival Cinemas as NPA

Jul 02, 2022 08:00 am

Shrikant Bhasi-promoted multiplex Carnival Cinemas is now classified as a non-performing asset (NPA) by Yes Bank, its sole lender. Yes Bank has given an ultimatum that the company either find a buyer and infuse around Rs 500 crore, or that the lender would convert the debt into equity and sell it, they said.

As most of the cinema halls are on lease, and the security that the bank has is much lower than the value of the loan, an out-of-court restructuring of Carnival's loans is a better option for Yes Bank rather than referring the company for insolvency proceedings, said the second person with direct knowledge about the debt recast plan.

The debt recast package may involve a longer repayment schedule and a reduction in interest rates, the people cited above said.

Incidentally, unlike other Covid-hit companies, Carnival did not opt for the one-time debt restructuring offered by the Reserve Bank of India, which precipitated the matters, said the first person.

A former employee said currently Yes Bank had completely taken control of the company’s cash flows. “They know that to find a buyer, the operations have to continue. So, the bank is keeping a very tight hold on all the payments … All revenues are coming to their account and the money to vendors and distributors is released after approval by Yes Bank,” he said.

It is also learned that if the promoter failed to infuse funds, the bank could consider converting some of its debt into equity and find buyers for it.

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