Amtek Auto CAP hinges on special audit

By: | Published: October 10, 2015 12:12 AM

Loan of R800 cr, while under consideration, won’t be sanctioned till promoter brings in equity: Lenders

Whether lenders, led by IDBI Bank, agree to extend Amtek Auto’s loan tenure and sanction additional funds will depend on the outcome of a special audit by audit firm TR Chadha &Co, sources told FE.

“The findings will determine the corrective action plan (CAP), which is being discussed among bankers,” a public sector banker said.

According to another lender, which has investments in Amtek Auto bonds, although the company has not yet paid the bondholders, there is no decision on its bailout package.

As a clutch of lenders were unable to finalise a line of credit to Amtek Auto, the auto components player delayed repayments to its bondholders on September 21, bankers and bondholders had told FE.

Lenders said while a loan of Rs 800 crore was under consideration, it will not be sanctioned unless the promoter brings in some equity. “The company has not sought a restructuring of the debt. It has asked for additional funds to overcome cash flow problems,” a banker noted, adding that lenders were working on it.

Investors in the company include Axis Bank, Syndicate Bank and Corporation Bank, while IDBI Bank and Bank of Maharashtra have term loan exposures.

In March 2015, the company’s standalone gross debt stood at Rs 7,844 crore, up from Rs 7,036 crore last year. In the three months to June 2015, it reported a net loss of Rs 158 crore on the back of Rs 866 crore in revenues with the interest outgo at Rs 237 crore.

Amtek Auto, part of the Amtek Group, is headquartered in New Delhi and is an integrated automotive component manufacturers in India. The company has facilities in India, Europe and North America and manufactures components for auto as well as non-auto sectors such as the railways, speciality vehicles, aerospace, agricultural and heavy earth moving equipment.

Shares of Amtek Auto fell 2.8% on Friday to close at Rs 43.35 on the BSE.

The company’s managing director, John Flintham, had recently told a business news channel the company may look to sell stakes in overseas business to pare debt. “We have a debt-reduction programme,” Flintham told the channel. “We will sell minority stake in overseas businesses, which are profitable and owned 100% by Amtek Auto.” Sales of non-core assets may fetch about $500-600 million, he said.

The company’s overseas businesses earn $1.8 billion in revenue and their equity value is about $2 billion, Flintham had told the channel, adding that it is planning to sell between 25% and 40% to raise as much as $600 million.

Amtek Auto’s troubles began when CARE Ratings suspended its credit rating last month. JPMorgan India Treasury Fund and JPMorgan India Short Term Income Fund have an exposure of around R130 crore to the company. Due to the downgrade by rating agencies, there was a sudden rush by investors to redeem their units and the fund house on August 28 capped redemptions at 1% of the total outstanding units on both schemes.

However, on September 14, JPMorgan Asset Management Company announced it would seek the approval of unit holders of both schemes to segregate the illiquid assets from the schemes within seven working days.

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