Automobile and Auto Components
- A well established manufacturer of two wheelers, belonging to one of the pioneering groups in automotives
- Joint venture with a leading automobile company in the world – stake subsequently bought over by the Indian counterpart
- Over the years, the company considerably lost its market share to new entrants and suffered operational losses, leading to liquidity problems
- Attracted financial investors but struggled to turn around
- Tie-up with Italian auto makers to launch new products in India, did not take off due to non-cooperation of the vendors owing to mounting debt
- Company was on the verge of erosion of its entire net worth
- Severe deterioration in the asset value resulted in part of the loans becoming unsecured.
- Account being “Standard” with the lenders, there was a limitation on the extent of the reliefs under restructuring plan.
- However, that would have resulted in substantially higher provisioning in view of the erosion in the value of the collaterals available.
Brescon Value Add
- Led the transaction on a bi -lateral basis to address differential approach of each lender away from CDR umbrage.
- Convinced the lenders to secure certain level of waiver of debt in a “Standard” account, considering the real value of security held (essentially negative working capital and impairment of fixed assets) and the risk of recovery of below 50 % in the event settlement proposal was not accepted.
- Devised approach for debt settlement enabled the company to deleverage its balance sheet by over 75 %
- Paved the way for raising of fresh funds from financial investors
- Correction of capital structure enabled the sponsors to eventually align their business interests.
- Debt derisking for the lenders with optimal recovery.