Lenders to CG Power and Industrial Solutions have agreed to a one-time loan restructuring to pave way for the Chennai-based Murugappa Group taking over the scam-hit equipment maker.

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CG Power had total debt of Rs 2,161 crore, out of which a consortium of 14 banks have taken a haircut of Rs 1,100 crore and restructured the remaining.

In separate but almost identical stock exchange filings, CG Power and Murugappa Group firm Tube Investments of India Ltd (TIIL), said lenders have accepted one-time settlement and restructuring of debt.

In August, TIIL had agreed to invest Rs 700 crore in CG Power for a 56.61 per cent stake.

This, it said, was subject to "satisfactory fulfilment of conditions precedents contained in?Securities Subscription Agreement (SSA)."

"The conditions precedent of the SSA inter alia included a condition that the lenders of CG Power accept one-time settlement and restructure the funded facilities and guaranteed debt in accordance with the terms of the binding offer made by the company to CG Power and the lenders in a manner that is mutually acceptable," TIIL said.

Now, CG Power, TIIL and the lenders have "executed the requisite binding agreements dated November 20, 2020 for one-time settlement and restructuring of funded facilities and guaranteed debt of CG Power."

The pact provides for lenders being paid an upfront amount of Rs 650 crore. Also, Rs 200 crore of debt would be converted into non-convertible debentures having a five-year tenure.

Besides, lenders would be paid "out of the proceeds from sale of CG House property on best efforts and as is where is basis, within a period of five years," the filings said.

The sale of the property would wipe another Rs 150 crore of debt from CG Power books. This is irrespective of the value the sale of the property realises.

"If the property sells for Rs 100 crore, all of it goes to the lenders but Rs 150 crore would be wiped out from CG Power books. Similarly, even if the property goes for Rs 200 crore, only Rs 150 crore goes off CG Power books," a source familiar with the pact said.

The pact also provides for "transfer/replacement of non-fund based facilities of the lenders to non-consortium lenders or CG Power procuring and submitting counter guarantees for the same."

TIIL had recently received the Competition Commission of India's (CCI) nod to acquire CG Power. In five-years CG Power will be debt-free.

In August last year, CG Power said its board discovered "significant accounting irregularities", including suspect transactions that have led to an understatement of the company's liabilities and advances to related and unrelated parties by hundreds of crores of rupees.

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It had said that advances to related and unrelated parties and the Avantha Group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively. Following these allegations, its chairman Gautam Thapar was sacked.