Banks reject corporate guarantee on loans to Reliance Defence, insist on Anil Ambani’s personal guarantee

Banks have asked Anil Ambani to give personal guarantee over loans to Reliance Defence and are not keen on accepting former promoter Nikhil Gandhi’s guarantee.

Anil Ambani-led Reliance Group took over Pipavav Defence from Gandhi last year and renamed it Reliance Defence. Ambani’s ambitious defence plans may hit a roadblock if he does not furnish a personal guarantee.

“Unless the stalemate is resolved, lenders may not go ahead in providing additional funding that the company needs for its existing project," a bank executive told ET.

Reliance Defence already has Rs 12,600 in bank debt and now has sought another Rs 400 crore in priority loans and a separate non-fundbased limit of Rs 1,000 crore.

The banks have also rejected a corporate guarantee from group unit Reliance Infrastructure.

As per reports, Reliance Defence wants to raise Rs 1,200 crore through a rights issue in which Reliance Group is expected to raise its stake by buying shares due to Gandhi.

ET reported the company has said that proceeds of the issue will enable Reliance Defence to exit from the corporate debt restructuring (CDR) process and strengthen its financial position. CDR involves distressed borrowers and lenders agreeing to easier loan terms.