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Rescue plan: Altico may offer to sell its assets

Altico’s asset sales could immediately fetch at least Rs 2,000 crore, market sources said.

, ET Bureau|
Oct 14, 2019, 07.51 AM IST
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Altico is banking on asset monetisation to repay these loans.
MUMBAI: Altico Capital is likely to present to its lenders a resolution plan this week that could involve selling some of its biggest loan assets, such as Skylark in Bengaluru, Casa Grande in Chennai and Marvel in Pune. Besides the proposal to sell these upscale mixed-use projects, the stressed financier may also offer to bring in equity from an alternative set of investors.

Two people aware of these plans told ET that Altico is also likely to tell its lenders that the assets it has financed are worth more than double the outstanding liabilities. That is sufficient cover to repay all the existing loans, Altico could argue, seeking more time to execute the relevant transactions and sell

‘Recalling Loans a Bad Idea’
Altico’s asset sales could immediately fetch at least Rs 2,000 crore, market sources said. Its total outstanding debt stands at Rs 4,361.5 crore. There are about two-dozen lenders, including State Bank of India, HDFC Bank and Yes Bank.

In its last few meetings with the lenders, Altico has said that recalling loans at this juncture would only aggravate the situation. Instead, orderly unwinding of assets would help lenders recover their advances in full, making it attractive for fresh equity investments. “It’s not that the company doesn’t have assets, but it takes time to sell real estate, especially in this market,” said one of the persons cited above. “Some lenders that had recalled loans are now a lot more confident, and are willing to consider the resolution plan.”

Altico did not respond to ET’s mailed query. It has hired Alvarez & Marsal for advice on the proposed restructuring. After the latest rating downgrades, some lenders have recalled about Rs 1,500 crore worth of credit lines earlier committed to Altico, putting pressure on the non-bank lender to repay immediately. Besides these recalls, the company needs to repay Rs 750-800 crore to its lenders over the next three months. Altico is banking on asset monetisation to repay these loans.

Altico last month defaulted on interest payments of Rs 19.97 crore, causing its liquidity position to worsen. Alvarez & Marsal has suggested it remain a going concern by conserving cash and quickly sell assets, helping draw a private equity investor. SSG Capital, Brookfield, Cerberus, and Apollo Global are among private equity investors keen on a stake in the company, while Abu Dhabi Investment Authority (ADIA), Clearwater Capital and Varde will likely remain sponsors of the property-focused financier.

Altico has a collateral cover of about Rs 11,000 crore against its asset size of around Rs 7,000 crore. While threefifths of its projects are in the residential space, the rest include commercial, logistics and warehousing facilities. The company may also offer to move to the retail end of property lending to help de-risk its business. “The company will not remain a builder-focused lender as retail housing loans should drive growth, and are considered low risk,” said the second person cited above.

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