Apollo Global Management is in preliminary talks with lenders to buy troubled non-banking financial company (NBFC) Altico Capital, but lenders have decided to first finalise the quantum of haircut they would be taking, by October 11.
Apollo, for now, has offered $150 million equivalent as primary equity for Altico, the troubled NBFC that defaulted unexpectedly in about mid-September. Altico was also in discussion with Cerberus Capital, KKR, Brookfield, Blackstone for a takeover of the company.
The lenders will be signing an inter-corporate agreement soon and will invite bids from other investors as well. The lenders, meanwhile, have decided that they will not discuss anything on a bilateral basis with the board of Altico.
In a meeting held on September 26, lenders disclosed that members of Altico had met bankers for separate deals but the lenders threatened to send legal notices to the company and asked the trustee to maintain status quo.
The lenders have decided that any decision on haircut, or settling of accounts, will be done by them and not through bilateral talks.
The bankers have also decided not to lend any additional amount even as some of the projects of Altico, which primarily lent to the real estate sector, is stuck because of want of capital.
According to sources, Apollo, in bilateral discussions with a few lenders, had agreed for no haircut, but banks now have decided to take a call on offers from Apollo, as well as other potential bidders, by October 11. Lenders will seek presentation for other potential investors with whom the company had earlier signed non-disclosure agreements, the sources said.
Lenders did not want the presence of Alvarez and Marsal, the consultant engaged by Altico to restructure its debt, while the lenders also raised objections to any non-disclosure agreement Altico has signed with any third party without consulting the lenders. The bankers have asked for a copy of the mandate given to Alvarez and Marsal, said sources.
Even as lenders are okay with presence of some Altico board members in lenders’ meetings, the banks now want an observer, or member in the board of the company. The lenders have also engaged E&Y to assist them in coordinating the resolution efforts.
Sources said lenders were considering formation of an informal core committee comprising State Bank of India, Bank of Baroda, Yes Bank, L&T Finance, Aditya Birla Finance and Reliance Mutual Fund to co-ordinate resolution efforts.
In the latest meeting on September 26, the lenders “expressed disappointment on no new development post default. There was no extra point shared by company in its presentation shared with lenders,” said a source. Altico also said that the Reserve Bank of India (RBI) was closely monitoring the daily cash flow position in the company, even as the company asked for some disbursal permission with the RBI.
Of the Rs 4,067 crore of asset book, which is not generating cashflows, Rs 880 crore is the pending disbursals for such projects.
However, lenders have agreed between themselves that even if the RBI gives its permission, no new funds would be disbursed to any existing or new project.
Investors in the company, meanwhile, didn’t seem interested in putting in fresh equity in Altico.