Monday , May 25 2020

Yearlong cash woes caused default, says Altico Capital


Beleaguered Altico Capital India Ltd said a prolonged cash squeeze for India’s shadow lenders and property developers after the collapse of IL&FS Group last year led to its default.
Substantial strain in the short-term financing markets following a default by IL&FS caused a knock-on impact on other non-banking finance companies and the real-estate sector, Altico Capital said in a statement. The financier is “facing challenges many similar businesses face in this environment,” it said.
Altico Capital, a non-banking finance company that focuses on lending to the real-estate sector, said earlier this month that it didn’t pay $2.8 million of interest on borrowings from Dubai-based Mashreqbank PSC.
Altico’s default worsens liquidity woes for the country’s shadow lenders, prolonging a cash crunch for the stressed sector. The squeeze has led to a series of rating downgrades for property financiers, including Indiabulls Housing Finance Ltd and Reliance Home Finance Ltd.
Mumbai-based Altico plans to ask lenders for time to map out a plan to repay debt, the company said. The company has just 2 billion rupees of cash on its books and has about 14 billion rupees of debt due by October 12.
Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council are the top investors in the company whose capital buffers stood at about 40 percent, or more than double the regulatory requirement, Altico’s investor presentation shows.

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