BANGKOK, Dec 15 (Reuters) - Thailand's Central Bankruptcy Court has approved a business plan for Sahaviriya Steel Industries Pcl (SSI), Thailand's biggest steel maker, to restructure debts worth 69.2 billion baht ($1.94 billion).
The court cleared SSI to implement the restructuring plan after some 91.90 percent of its creditors voted in favour in September, SSI said in a statement on Thursday.
Progress on restructuring SSI's debt will be positive for the Thai banking sector as bank creditors will be able to reduce reserves related to SSI loans.
The Thai banking sector's bad debt rose last year after money lent to SSI and its UK subsidiary was classified as non-performing loans (NPLs), requiring lenders to set aside special loan loss provisions.
SSI UK went into liquidation in October 2015 after mothballing its Redcar plant in northeast England and cutting 1,700 jobs.
Krung Thai Bank, Siam Commercial Bank and Tisco Bank are three major creditors to report a surge in provisions after loans to SSI and its British unit turned into NPLs in the third quarter last year.
The total debt claim was 69.22 billion baht, including 5.3 billion baht interest, and the plan involved debt-to-equity conversions and debt repayment to 13 groups of creditors, it said.
Under the plan, SSI will reduce its registered capital to 1.1 billion baht from 32 billion baht and then issue 10 billion new shares to some groups of creditors to convert debt into equity at 0.05 baht per a share.
This will raise its registered capital to 11.1 billion baht.
SSI shares were suspended from trading after the company entered a restructuring process and they last closed at 0.05 baht on April 26. ($1 = 35.7700 baht) (Reporting by Khettiya Jittapong; Editing by Keith Weir)