Realignment and Enhancement of Credit Lines

Coinmen Capital Advisors     > Debt Realignment > Realignment and Enhancement of Credit Lines

Client Background

The company involved in this transaction has been undertaking civil and electrical engineering work for the Ministry of Defense (MOD) since 2005. The company is registered with Defense Research and Development Organization (DRDO), under CIV-IV and ED-IV category, which allows it to undertake civil and electrical projects awarded by the organization. Apart from that, the company is also registered as an SS class contractor with Military Engineering Services (MES).

About the Transaction

Prior to associating with Coinmen, the group had a banking arrangement with a set of PSUs and private lenders with NFB facilities to the tune of INR 2000 million, with collateral ranging between 75-150% between lenders.

However, since substantial collateral was blocked with lenders, the company’s growth was getting stalled due to limited credit lines. Further, a few member banks came under the PCA framework, which made it difficult for the company to use sanctioned facilities from these lenders.

Goal Of The Transaction

The goal was to rightly appraise the company’s requirements in short term as well as medium term. Also, it comprised of assessing available securities vis-à-vis requirements and then re-engineering the limits.

Coinmen’s Role

  • On a relatively short notice of 30-45 days, Coinmen organized urgent credit lines for the company to the tune of INR 450 million from 2 private lenders and also helped in the submission of BGs on time which was stalled with one of the existing PSU lenders being under PCA.
  • In a phased manner, we re-engineered the entire banking arrangement of the company. In the process, they induced new lenders and brought the entire collateral cover to below 40% and enhanced the facilities from time-to-time, on need basis. In total, we organized more than INR 2000 million for the group.
  • Coinmen also assisted the company in getting an important residential asset released which had earlier been charged to lenders.

Outcome Of The Transaction

  • As a result of the transaction, an exit route was facilitated for the existing lenders holding high collateral.
  • We also managed to reduce security from more than 100% to around 40% with standardized terms across the lenders.