MUMBAI: Nonbank lender Altico Capital’s bond investors, including Flipkart cofounder Sachin Bansal and Reliance Mutual Fund, face immediate defaults on two series of outstanding debt coming up for repayment in the next two weeks–about Rs 95 crore all told is due on September 26 and 29.
Altico has bonds worth a total Rs 1,808 crore that will mature between now and May 2022, India Ratings data showed. Most of them are due to mature in 2020 and 2021.
Another series of bonds worth Rs 30 crore is scheduled to mature late December. These are short-term papers sold in March and June 2018 through private placements.
Fund houses and high net-worth individuals (HNI) invested in these instruments that promised yields up to 10.5%.
Mumbai-based Vistra ITCL is the trustee, or custodian, of these bonds.
“The ongoing crisis of capital may deepen with such a top investor-backed company failing to meet debt obligations,” said an investment banker at an Indian financial institution.
Altico and Bansal didn’t respond to queries.
The nonbanking finance company (NBFC) offers real estate credit and is backed by Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council. The lender said last week that it missed Rs 19.97 crore in interest payments to Dubai-based Mashreq Bank.
It could also not pay Rs 85.78 lakh in interest due on a short-term loan facility taken from the government-run IFCI. Altico Captial has borrowed Rs 4,361.55 crore from banks and financial institutions.
NBFCs have been squeezed by a liquidity crunch that was triggered by the default of the Infrastructure Leasing & Financial Services (IL&FS) group last September. The government has sought to provide support to NBFCs through a partial guarantee scheme.
“Our failure to repay the amounts set out… may result in an acceleration of interest repayment/redemption obligations in respect of non-convertible debt securities issued by us and may trigger a default in their timely repayments,” Altico Capital said in an exchange filing last week.
India Ratings downgraded Altico’s debt to D or default grade after the missed interest payments.
Some investors have questioned the company’s credibility on the quality of information given to the rating company, although none has alleged it publicly so far.
On September 3, India Ratings cut the creditworthiness of Altico Capital India Ltd to IND A+ from IND AA-, with a negative outlook.
“At the end of June 2019, the liquidity reserve was sufficient to meet only four and a half months of obligations,” the rating company said in the note. As recently as September 4, a day before it approached courts against AU Small Finance Bank, Altico told lenders that it had a cash balance of Rs 515 crore.
“Within about a week, the company could not repay just Rs 21 crore, which is a big dichotomy,” said an executive at a large institutional investor.
Source: Press Trust of India