Realty
Case Outline
- One of the largest real estate developers with presence in India and Dubai with significant land bank
- Hit by slow demand post global financial crisis of 2008 and the consequent dried up financing
- Debtors realization stretched substantially with a drop in bookings and rising cancellations
- Attempts to monetise land parcels to meet impending debt obligations of ~ INR 4Bn, failed due to abysmally low valuations being offered
- Defaults in payments, eventually, resulted in the company being classified as a non performing asset
Issue
- Ongoing 36 projects needed funds for completion
- Additional funding from banks’ other sources did not have any visibility
- Low probability of lenders to consider restructuring due to high risk weightage attached to the sector
Normal Solution
- Distress sale of the incomplete projects at rock bottom valuation
- Could have resulted in :
- Value destruction for shareholders
- Write down of the value of debt by the lenders
Brescon Value Add
- Positioned the company credentials in the right perspective and convinced lenders about the future potential of the company
- Addressed issues “project by project” and worked out the funding requirement based on cash flows for each of the 36 projects
- Devised tailor-made solutions for each of the 22 lenders, based on their exposure, cost, sacrifice, and security
- Convinced lenders to provide further financial support to complete the ongoing projects.
Impact
- Increase in shareholders’ wealth by 5x within 2 years
- Credit rerating enabled raising equity of ~ INR 5Bn within a year, post restructuring and reduce debt, improving its asset cover and solvency.
