Amtek Auto on Thursday sought the approval of shareholders to allow banks to convert the company’s debt — either wholly or partly — up to an amount of Rs 20,000 crore into equity.
Amtek Auto on Thursday sought the approval of shareholders to allow banks to convert the company’s debt — either wholly or partly — up to an amount of Rs 20,000 crore into equity. The Rs 20,000 crore limit includes any loans taken in the future.
The company, which defaulted to bondholders in August last year had a standalone gross debt of Rs 9,035 crore at the end of March 2015, up from Rs 7,779 crore at the end of March 2014. Amtek reported a net loss of Rs 661 crore in 2015-16 on the back of Rs 1,512 crore in revenues. During the year, the firm’s interest outgo was Rs 535 crore.
Amtek Auto’s troubles began when Brickwork Ratings downgraded its rating to BWRC from BWRA+ in August 2015. Immediately thereafter, the reference prices of bonds held by two Indian debt funds run by JPMorgan Chase was reduced to 75% by valuation agencies Crisil and Icra. JPMorgan subsequently capped redemptions on both schemes at 1% of the outstanding units.
Investors in Amtek’s bonds include banks like Axis Bank, Syndicate Bank and Corporation Bank, while IDBI Bank and Bank of Maharashtra have term loan exposures. Lenders may opt to convert the debt into equity using the Reserve Bank of India’s (RBI) strategic debt restructuring (SDR) norms. Last year, lenders to Amtek Auto had formed a joint lenders’ forum to formulate a corrective action plan for its Rs 6,500 crore term loans. In September last year, FE reported the auto components player delayed repayments to its bondholders, having failed to get a line of credit. A sum of Rs 800 crore was due to bondholders.
In a regulatory filing on Thursday, the company said that it is looking “to convert the whole or part of the loans of the Company (whether disbursed on or prior to or after the date of this resolution and whether then due or payable or not), (as already stipulated or as may be specified by the Financial Institutions/Banks under the financing documents executed or to be executed in respect of the financial assistance…”
It added the part of the loan converted would cease to carry interest from the date of conversion and that the would stand correspondingly reduced. “Upon such conversion, the repayment installments of the loan payable after the date of conversion as per the financing documents shall stand reduced proportionately by the amounts of the loan so converted,” it added.
The company said the equity shares allotted to the lenders would carry, from the date of conversion, the right to receive proportionately the dividends and “other distributions declared or to be declared in respect of the equity capital of the Company and the shares shares shall rank pari passu with the existing equity shares of the company in all respects”.
Amtek Auto — part of the Amtek Group — is headquartered in New Delhi and is an integrated automotive component manufacturer. 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.