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Altico Cap promoters, investors differ on fresh fund infusion

India Ratings last week downgraded Altico Cap to "D" or default from 'A+' .

, ET Bureau|
Sep 23, 2019, 09.22 AM IST
Mumbai: Negotiations between the promoters of Altico Capital, lenders and investors are locked in a stalemate as a demand to raise promoters’ equity into the foreign fund-backed non-banking finance company (NBFC) is gaining ground to meet immediate debt obligations.

“Altico is committed to maintaining an open and active dialogue with all stakeholders, including regulatory authorities, and will provide further updates as appropriate,” the company said in a press statement Sunday afternoon.

Embattled real estate financier sought time from lenders/investors to devise a plan, which would help it meet debt obligations, it said.

“It is important that stakeholders give Altico and its advisors time to craft a plan that may maximize asset value, refrain from actions that exacerbate the liquidity problem,” the company said, adding one has to bear in mind the significant headwinds the real estate sector faces in India at the present time.

Altico has asked lenders to grant a standstill period by signing an ICA and to allow the company to continue as a going concern before and during the standstill period, said a source. The management appointed Alvarez & Marsal and law firm Shardul Amarchand Mangaldas to preserve the value of assets and maintain the company as a going concern till a long-term solution can be implemented. Altico’s lenders include Yes Bank, SBI and Bank of Baroda.

Last week, Altico management met lenders and bond subscribers to resolve the immediate debt crisis. “Investors and lenders demanded more promoters’ equity capital infusion but Altico is apparently not agreeing to it citing higher existing holdings,” an executive involved in the matter told ET.

Fiera Capital (formerly Clearwater Capital Partners) held 44.2 per cent share) in partnership with Abu Dhabi Investment Council (33.6 per cent share) and Varde Partners (22.2 per cent share),. The three partners infused a combined capital of USD 300 million in Altico.

The NBFC offers real estate credit and is backed by Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council (ADIA).

While Clearwater Captial held 44.2 per cent ownership in June quarter, ADIA owned 33.6 per cent, show a market estimate. Varde Partners’ share was at 22.2 per cent.

Such shareholdings are already at elevated levels reflecting the owners’ commitment, the company management cited in the meeting.

Altico has bonds worth Rs 1,808 crore that will mature between now and May 2022, India Ratings data showed. Most of them are due to mature in 2020 and 2021.

In past 10 days, the lender said that it missed Rs 19.97 crore in interest payments to Dubai-based Mashreq Bank. It could also not pay Rs 85.78 lakh in interest due on a short-term loan facility taken from the government-run IFCI. Altico Captial has borrowed Rs 4,361.55 crore from banks and financial institutions.

Altico has loan book of Rs 6,888 crore. The company has been facing tight liquidity due to the current macro environment and repercussions of the IL&FS crisis, which led to lack of access to fresh capital for NBFCs.

India Ratings last week downgraded Altico Cap to "D" or default from 'A+' .

On September 12, 2019, the company defaulted on a repayment of Rs 20 crore to an External Commercial Borrowing facility from Mashreqbank PSC and subsequently the credit ratings have been downgraded to D.

The company has received total recall notices of Rs 1,056 crore even before the default and had no liquidity or ability to service these obligations. “Given scheduled repayments of Rs 488 crore along with acceleration of facilities to the tune of Rs 806 crore due in September, and in the absence of any new financing by monetisation, fund infusion or fresh leverage in the short term, the company was unable to honour its obligations,” the company told lenders in a meeting.

The company expects material deterioration in asset quality in the short -term and hence the portfolio would need very active and focused management to minimize the adverse impact and to optimise realizations.

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