First, thanks for seeking my view.
The approval of this package was under RBI prudential framework for restructuring loan, which was again updated at time of COVID. The key point here is while lenders are NOT Taking write down technically (although realistically they are taking write down in present value term, for techncial purpose, there is no writedown). Total loan is divideded in two parts. Sustainable debt and Unsustainable debt. The unsustainable debt portion is sold by lenders to Aditya birla ARC which got 0.1% preference share, which were again purchased by Malpani group and converted in equity. Further, lenders themselves took around 10% stake in the company. So this is one of few restructuring which has happen under RBI framework (something similar to old CDR framework).
Hence, I can say that, at least, technically, that there is no write down in debt for lenders. Further, lenders have taken equity position and would have considered equity upside in case restructuring is sucessful and that could have also been factor for some write down. Thirdly, in order to write down equity capital, (like in NCLT scheme in IBC), lenders had to move through IBC. RBI framework does not provide equity writedown for existing shareholder. Hence, in this case lenders may have found value in equity stake on succesful being more than write down of debt and hence opted for RBI frame work. This would be exception than rule. I can understand this from lender perspective, fail to understand from new equity investor point. Why one should agree to share equity value with existing shareholder/promoter in turn around case?
Enclosing equity capital for the company, RBI Frame work, Imaggica Scheme restructuring in case any one is more interested.
RBI Resolution of Stressed Assets June 2019.PDF (431.3 KB)
RBI Resolution of Stressed Assets Covid 19 6 August 2020.PDF (226.5 KB)
Imagica Results 31 March 2023.pdf (2.5 MB)
Imagica Reoslution plan 22 June 2022.pdf (3.3 MB)
Disclosure: No investment in company, No recommendation, Not a SEBI registered advisor.
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