US-based private equity group Cerberus Capital Management has revised its offer for shadow bank Altico Capital India, a senior executive whose bank is a lender to the distressed firm told VCCircle.
The New York-based investor that specialises in distressed deals submitted its revised bid on Friday to counter special situations investor SSG Capital Management. The offer includes an upfront payment of Rs 2,500 crore to Altico’s lenders and an additional equity infusion of Rs 1,000 crore for completion of stuck projects in the home financier’s portfolio, The Economic Times first reported. Lenders are also considering an alternative plan by Cerberus of an upfront cash payment with a 48% haircut, said another banker.
On the other hand, the SSG offer involves Rs 2,000 crore ($280 million) of fresh equity into the non-banking financial company plus security receipts.
The earlier offer by Cerberus included a 15% upfront payment and the rest of the payout staggered over seven years. This did not find support among many lenders including State Bank of India (SBI), which is the lead lender in the consortium.
Creditors will be voting for approval of the bids on 26 February.
In restructuring mode over the past six months, Altico, a non-banking financial company that focuses on the real estate sector, is left with two buyers in the race -- Cerberus Capital and Hong Kong-based Asia-Pacific-focused SSG Capital Management.
Previously, Altico's existing shareholder Clearwater Capital Partners had proposed staggered payment over 5.75 years with the first tranche being Rs 630 crore in 2020-21 and maintaining control of the non-banking financial company.
Other entities previously in the fray included Kotak Investment Advisors Ltd, Apollo Global Management LLC and Varde Partners LP.
In September last year, amid the non-banking financial company liquidity crisis, Mumbai-based Altico failed to make an interest payment of Rs 19.97 crore to the United Arab Emirates-based Mashreqbank PSC. The payment was due on a loan of Rs 340 crore, a six-year tenor loan with an interest rate of 11.65%.
Soon after, Naina Lal Kidwai stepped down as chairperson of Altico Capital followed by resignation of its chief executive officer or CEO Sanjay Grewal.
On September 3, India Ratings and Research downgraded Altico’s debt and lowered the outlook to ‘negative’. It said that Altico’s loan book of Rs 6,900 crore had high single-party exposures and that it had lent to real estate developers, many of which have weak credit profiles.
For the first half of the financial year 2019-20 (April to September 2019), Altico reported a net loss of Rs 368.12 crore.
Established in 2001, the firm is controlled by Canadian asset management firm Fiera Capital. In August last year, Fiera had acquired Altico’s Hong Kong-based founder Clearwater Capital Partners. Abu Dhabi Investment Council and Varde Partners are Altico’s other investors.
Both SSG and Cerberus Capital are active buyers of distressed and non-performing assets (NPAs). Founded in 1992, Cerberus is a global leader in alternative investing with approximately $42 billion in assets.
Over the past year or so, SSG Capital has bid for several assets including bankrupt power firm RattanIndia and two distressed units of Uttam Galva.
In March last year, it joined hands with Tata group and Singapore sovereign wealth fund GIC to invest in GMR Airports Ltd. SSG agreed to invest Rs 1,780 crore to buy a stake of 9.9% in the airport operator.
Earlier this year, New York-listed Ares Management Corp announced its acquisition plans for an undisclosed sum to get a controlling stake in SSG Capital Holdings Ltd as part of a strategy to expand in Asia.