Trident Microfin has proposed to convert its debt into equity through a consortium of bankers led by the Indian Overseas Bank. The company is expecting to raise a minimum of R70 crore through this conversion. The consortium of banks has agreed to convert 25% of its debt into equity and another 25% of the debt into convertible preference shares. This will enable the company to satisfy the capital adequacy requirements of the RBI.
?We are expecting minimum of R70 crore funding. Once the master restructuring agreement is signed, within three months, the conversion should happen. There will be three nominee directors from all banks together. So the total board strength will be eight members,? Kishore Kumar Puli, founder and MD of Trident Microfin, (formerly known as Annapurna Financial Services) told FE.
Kishore, who was instrumental in designing and implementing microfinance best practices while working as unit head and regional manager in Basix, said, ?We have approached the corporate debt restructuring (CDR) panel through Indian Overseas Bank and the restructuring package has been approved by the CDR at their meeting held in June. Indian Overseas Bank, who is designated as the monitoring institution, is taking further action for implementation of the package.?
Banks had approached the RBI seeking approval to extend the debt restructuring programme for MFIs beyond March 2011. The move was aimed at protecting profitability without making additional provisions on these loans.
?We are requesting the banks to extend fresh lines of credit for our operations in Maharashtra and Madhya Pradesh. We require about R70 crore immediately. Our current debt component is R140 crore and the loan portfolio is R140 crore,?? he said.
Trident has been approached by several other commercial banks and there is a possibility of further capital infusion by some more organisations in the company. The company?s total assets, as on March 31, was R150.50 crore.