Debt-ridden Altico Capital on Tuesday said its Board of Directors approved the implementation of a settlement with its lenders.
The settlement involves a sale of the undertaking of the company and settlement of the dues of the Lenders, including the listed non-convertible debentures issued by the Company, the company informed stock exchanges on Tuesday night.
As part of the resolution, the company’s loan assets will be transferred to a new entity controlled by SSG Capital. The agreement with lenders is “pursuant to a process conducted by the lenders, which resulted in selection of Ares SSG Capital Management (Singapore) Pte. Ltd. for the purposes of acquisition of assets of the Company, and other related matters,” Altico said.
Subsequent to such a sale, the Company intends to make an application to the Reserve Bank of India to surrender its certificate of registration as a non-banking financial company, Altico said. The whole process of settlement and implementation took more than a year and a half. This is probably the first major case of a corporate debt restructuring outside the Insolvency and Bankruptcy Code (IBC) mechanism.
The completion of the settlement is subject to customary conditions, as specified in the definitive documents, including, without limitation, the approval of the shareholders, for which an extraordinary general meeting is proposed to be convened on February 24, 2021, the company said.
The Board has also approved a ‘record date’ for the purposes of payment to the holders of the listed non-convertible debentures issued by the Company, and a separate concurrent disclosure is being made with respect to such record date, it said.
Altico owes around Rs4000 to Rs 6000 crore to a clutch of lenders. As part of the plan, banks will likely take a 50 percent haircut. Banks that had exposure to Altico include Yes Bank, State Bank of India (SBI), HDFC Bank, and Bank of Baroda (BoB) among others.
In November last year, Altico said it defaulted on interest payments of RS 6 crore to five institutions including SBI and BoB. Lenders had reached an agreement on the resolution plan for Altico in March 2020 but the process of implementation got delayed. As part of the plan, lenders chose SSG Capital as the preferred bidder. With the Altico Board now approving the plan, which includes a sale of assets, the lenders can get at least some of their money back.