Altico Capital lenders approve SSG Capital's resolution plan!!

Lenders to Altico Capital have voted in favour of the resolution plan proposed special situations fund SSG Capital, said a person aware of the development.


The person said that the voting which began on 11 March and ended at about 5 pm and majority lenders have voted in favour of SSG Capital's resolution plan.

SSG Capital has offered Rs2,750 crore upfront for the non-banking financial company (NBFC), but plans to sell off its loans and close it down later. The other contender, private equity firm Cerberus Capital, meanwhile, offered Rs2,500 crore upfront, security receipts (SRs) of Rs400 crore redeemable in three years, and Rs1,000 crore as equity infusion.
Altico Capital, which is backed by Clearwater Capital Partners, Abu Dhabi Investment Council and Varde Partners defaulted on interest payment to Dubai-based Mashreqbank PSC in September, amid tight liquidity in India's credit market.

Mint reported on 2 March that while rescue plans for Altico Capital were in, lenders are caught in a dilemma. The higher offer effectively winds up the troubled lender, while the lower one saves jobs and ensures continuity.

Apart from these two, the current management of Altico Capital has worked out a debt recast plan. It does not offer any upfront payment, but offers to repay the entire debt in 69 months at an interest rate of 10%.

Altico's 2018-19 annual report said it had 32 lenders and investors, including public and private sector banks, foreign banks, mutual funds, NBFCs, financial institutions and family offices. According to the third person, since Altico is a systemically important NBFC, its shuttering could send the wrong signal in the stressed credit market. India's non-bank financiers are yet to recover from the shock defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS) in September 2018.

As on 31 March 2019, Altico's funding mix includes banks (54%), mutual funds (23%) and the balance from NBFCs and others.

The troubled real estate lender reported a net loss of Rs368.12 crore in April-September 2019. In the corresponding period of 2018, it had reported a net profit of Rs160.47 crore. Following the default, Altico received loan recall notices amounting to ₹2,218.13 crore from various lenders, it had said last November. As on 30 September, its outstanding debt was Rs4,370 crore.