Lenders Meet On Altico's Potential Restructuring Deal Next Week: Report
The first lenders meet for a potential restructuring of non-banking finance company (NBFC) Altico Capital India is scheduled to be held on next Monday, sources said on Friday.
Sources further revealed that Altico was advised not to fulfil the interest payment obligation on External Commercial Borrowing availed from the UAE-based Mashreqbank till the first lenders' meet on a potential restructuring deal was held.
On Thursday, a regulatory filing disclosed the Altico had defaulted on the gross principal amount of Rs 340 crore. The interest payment comes to Rs 19.97 crore.
According to sources, Altico has already initiated talks with lenders for a potential restructuring.
"They have appointed Alvarez & Marsal as debt advisor and SAM for legal. Together, they advised Altico to not pay Mashreq and wait for the first lenders' meet which is scheduled for next Monday," sources said on Friday.
Sources say that post the rating downgrade by India Ratings, AU Bank and HDFC Bank marked the company's fixed deposit lying with them, as lien.
"First, AU Bank which had Rs 630 million of fixed deposit as collateral, marked a lien on it. Once this came known, HDFC Bank too marked the fixed deposit lying with it of Rs 2.5 billion, as lien," sources said.
"Altico still had another Rs 2.5 to 3 billion of cash with other banks, to pay Mashreq Bank."
The company's total borrowings from banks or financial institutions stood at Rs 4,361.55 crore as on September 12.
Besides, the development comes just a day after a report surfaced that said the company's Chairman Naina Lal Kidwai is understood to have stepped down.
Ms Kidwai was the former country head and group general manager of HSBC India.
Altico Capital India was incorporated in January, 2004. The NBFC's shareholders include Clearwater Capital Partners, Abu Dhabi Investment Council and Varde Partners.
The company focuses on senior secured lending to mid-income residential projects and Commercial Real Estate sector across Tier-1 cities in India which include Mumbai, NCR, Chennai, Bengaluru, Pune and Hyderabad.
Earlier in the month, India Ratings and Research had downgraded Altico's long-term issuer rating to IND A+' from IND AA-' and short-term Issuer rating to IND A1' from IND A1+'.
The ratings agency gave a negative outlook.
"The revision takes into account the continued pressure on the real estate sector, which has resulted in a weakened operating environment for the construction lending business, the stretched working capital cycle for real estate borrowers, which has led to volatile delinquencies, tighter funding, which has resulted in wider spreads, and diluted on-balance sheet liquidity buffers," the ratings agency had said.
"While the company is diversifying its portfolio both in terms of sectors and ticket size, it is likely to be reflected in the performance only gradually."
India Ratings and Research's said that Altico's loan book has exposure to real estate developers, many of whom have weak and stretched credit profiles.
"The operating environment for real estate players has become extremely challenging, with the tepid sales velocity of residential units, especially in the mid and higher ticket segments, and the funding crunch faced by the sector, given the heightened risk aversion of lenders," the ratings agency said.
India Ratings and Research's said that Altico's loan book has exposure to real estate developers, many of whom have weak and stretched credit profiles.
"The operating environment for real estate players has become extremely challenging, with the tepid sales velocity of residential units, especially in the mid and higher ticket segments, and the funding crunch faced by the sector, given the heightened risk aversion of lenders," the ratings agency said.
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