Lenders to beleaguered real estate financier Altico Capital India Ltd., who are reviewing three resolution plans, may decide to go ahead with a bid from Hong Kong-based SSG Capital, according to two people in the know.
Apart from SSG Capital, Cerberus Capital Management and Altico Capital’s promoters have also submitted resolution plans for the non-banking finance company. The bidders put in revised plans last week, improving on offers made to lenders earlier.
Altico Capital’s total debt stands at around Rs 4,300 crore. SBI Capital is advising the lenders on the restructuring process while Alvarez & Marsal is advising the company.
SSG Capital’s latest offer involves repaying 52 percent of Altico Capital’s debt upfront, which is higher than the 45 percent amount proposed earlier, the people quoted above said on the condition of anonymity. The Hong Kong-based distressed asset investor is also willing to issue security receipts for the remaining debt, which will be paid over time.
According to one of the two people quoted above, the consortium of lenders is favourably considering SSG Capital’s plan as it involves a higher upfront payment and has a realistic repayment plan for the rest of the debt.
Cerberus Capital Management, an American distressed asset investor with assets under management of $50 billion, is looking to repay half of Altico Capital’s debt upfront but is asking lenders to write off the remaining debt, the people quoted above said. Previously, Cerberus Capital had sought to repay a much smaller portion of a little over 10 percent of the debt and structure the remaining repayment over a longer period.
Altico Capital’s promoters, which includes Abu Dhabi Investment Council, Clearwater Capital Partners and Varde Partners, have proposed to repay the lenders in full over a period of nearly six years, the people quoted above added. This repayment would also include monetisation of the company’s most secure assets to willing buyers. Previously, the NBFC’s promoters had submitted two separate plans, as Varde Partners had a difference of opinion with the other two investors. Lenders, however, pushed them to submit a joint plan.
The plans will be put to vote on Feb. 26, after which the lenders will finalise the restructuring process, the people quoted above said.
Emails sent to SBI, Altico Capital, SSG Capital, and Cerberus Capital Management on Friday didn’t elicit a response.
Altico Capital faced a liquidity crunch last year amid risk-averse domestic markets where raising funding for real estate NBFCs had difficult. The stress came to light after the company defaulted on interest payment worth Rs 20 crore to Mashreqbank PSC against external commercial borrowings.
HDFC Bank Ltd., which also acted as a primary dealer for Altico Capital, had held the ECB funds worth Rs 220 crore in a fixed deposit. The private bank adjusted its own outstanding dues against the fixed deposit, citing Altico Capital’s weak financials. The sequence of events led to a worsening of the liquidity crunch at the lender, which was eventually downgraded to default rating by CARE Ratings.
Other lenders to Altico Capital, especially SBI, publicly voiced their dissent against HDFC Bank’s action. According to the first person quoted above, the issue was brought up again during last week’s meeting as the rest of the consortium asked the private sector bank to reverse the Rs 220 crore into the company’s account.
Altico Capital is also functioning without a chief executive. Sanjeev Agarwal, the interim CEO, quit in November. Agarwal, who was formerly the company’s chief operating officer, had taken over the leadership after CEO Sanjay Grewal resigned in October.
Also Read: Bad Loans Swell at India Shadow Bank Altico
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