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Altico’s lenders rope in SBI caps, EY to work on resolution plan

Troubled NBFC, too, working on a turnaround plan with the help of Alvarez & Marshal.

, ET Bureau|
Oct 08, 2019, 09.47 AM IST
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Mumbai:

Lenders to Altico Capital have appointed EY and SBI Capital Markets to work on a resolution plan that aims to help revive the stressed real estate-focused non-bank financier, which is itself working on a turnaround programme. This week, Altico is expected to submit a resolution plan to its lenders with the help of Alvarez & Marshal that is advising the company, said sources involved in the exercise.

EY India and SBI Cap did not comment on the development.

Lenders have reached out to global investors offering a stake in the company as they want them to consider their earlier offers, sources with direct knowledge of the matter told ET.

Shareholders of Altico had earlier declined those institutional investors who were willing to invest. “Banks, too, are drawing up a revival plan with the help of those two market consultants as lenders need to take a quick decision before the recoveries get compromised,” said one of the persons cited above. “Lenders are keen to give a controlling stake to one of those foreign institutional investors.”

SSG, Apollo Global, Oaktree Capital, and Brookfield are negotiating with lenders to revive Altico Capital, ET reported on October 4. Its existing key shareholders have expressed their inability to invest more equity.

A large domestic investment banker brought Apollo Global as a potential investor several weeks before Altico defaulted on loans.

The banker sought three months for due diligence, but that was not accepted.

“A section of the lenders expressed displeasure over the matter as they were unaware of such an offer earlier,” said a senior industry executive.

Although a company is not required to make it official to its lenders unless an offer is finalised, some argue that such a proposal could have helped escaped default if the cash position was in stress.

Altico is backed by Clearwater Capital, Abu Dhabi Investment Council and Varde Partners. It got into trouble last month after it had failed to pay ₹19.97 crore in interest payments on a loan obtained from the Dubai-based Mashreq Bank despite having sufficient funds.

Existing shareholders also declined to bring in further capital to support upcoming lender repayments, citing their latest infusion in March.

Around mid-September, India Ratings and CARE cut Altico’s creditworthiness to ‘junk’ category.

In its rating rationale, India Ratings cited the deteriorating operating environment for real-estate players, dilution in liquidity buffers and a concentrated loan book with high single-party exposure.
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