 "Bankers, Amtek in last-ditch efforts to avoid bond default")
Amtek Auto and its bankers were on Monday huddled in last-minute efforts to stave off a default on Rs 800 crore of bonds. Despite the uncertainty over repayments, the Amtek stock closed 7.2 per cent higher on the BSE at Rs 51.9.
The exchange has sought a clarification from the company on reports of it being in refinance talks, as the bond payment deadline has expired.
Officials from public sector banks said there was no final word on the status of the bonds, due for redemption on September 20. The lenders were in talks with company officials and a corrective action plan was in the works.
Meanwhile, the group's Singapore-based holding company for foreign assets is trying to raise funds required for other repayment obligations.
JPMorgan Mutual Fund - through two of its schemes JPMorgan India Short Term Income Fund and JPMorgan India Treasury Fund - had an exposure of about Rs 190 crore to Amtek Auto paper which was due for repayment.
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"The fund house had not received payment till 4 pm. JPMorgan was asked to wait till 6 pm. However, later there was no communication from Amtek side. It is highly likely that Amtek has defaulted on its payment obligation to JP Morgan MF," said a person with the knowledge of the development.
JPMorgan had not updated the net asset value (NAVs) for the two schemes that have exposure to the Amtek paper on its website till 8 pm.
The schemes NAV has already taken a hit after the reference price of the bond held by the two schemes was reduced to 75 per cent by the valuation agencies CRISIL and ICRA on August 28.
A joint lenders' forum was working on the contours of the corrective action plan, said a senior public sector bank official. Banks have an exposure of Rs 26,000 crore to the group. Of that, Amtek Auto accounts for about Rs 7,800 crore.
Last week, the company had told Business Standard a joint lenders' forum had been formed to align maturities with cash flows.
The company's accounts are standard and it hasn't missed interest payments. It has also maintained it doesn't need to restructure debt. The company is set to raise $1 billion through an asset sale, which will halve Amtek's debt. So far, there has been no default by the company.
Before providing fresh loans to the company, lenders to the Amtek group have decided to go for a special audit of the books of various group companies.
While details of the action plan will differ from case to case, lenders will ask the promoters to pledge more of their holdings and sell some group companies to generate resources. In addition, promoters would be required to bring their own resources to indicate their "skin in the game", said a bank executive.
Lenders are considering inserting a clause for strategic debt restructuring, which will empower them to acquire a stake of at least 51 per cent in the flagship company or other group companies to recover bad loans.
Earlier, in a communication to BSE, Amtek Auto had said it was considering various means of de-leveraging its balance sheet, including selling non-core business, a minority stake in foreign companies and some industrial real estate assets. However, as of now, no negotiations have taken place in this regard. The company has said in case any positive outcome emerges on this front, it will intimate exchanges of it.
Meanwhile, Amtek has mooted a proposal to segregate the illiquid assets (Amtek exposure) of the scheme. The decision on the proposal is likely on September 28 following a postal ballot of unit holders.
If the proposal goes through, the NAV of the existing units in the schemes would drop by the value representing the illiquid segregated asset and all unitholders on the record date will receive proportionate units to reflect their interest in the value of the segregated asset.
The fund house in a recent note had said investments other than that of Amtek are highly liquid and segregation will help the fund house lift the redemption restrictions currently in place.
