Takeover with Enhancement on Improved Terms

Coinmen Capital Advisors     > Debt Syndication > Takeover with Enhancement on Improved Terms

Client Background

The concerned group is a closely held public limited company, which began its operations in 2003. The group manufactures and markets thermo-mechanically treated (TMT) bars under 3 subsidiary brands. Its manufacturing facility is in Ghaziabad (Uttar Pradesh).

Problem Statement

The company had a banking arrangement with a set of 2 PSU lenders, enjoying facilities to the tune of INR 450 Mn.
Due to inherent issues in the steel sector as well as issues of default within the group’s extended portfolio, the company was being charged higher rates, despite its performance being satisfactory.

The company reported a decline in sales in the financial year under assessment. To aggravate things further, one of the lenders came under the PCA framework, thus making day to day operations difficult.

Goal Of The Transaction

Re-arrangement as well as refinancing of debt with a holistic exit strategy for the flagship brand of the group company and ensuring its business growth.

Coinmen’s Approach

  • Coinmen stepped in and advised the company on a complete exit plan and re-engineering of the entire debt.
  • We prepared a detailed proposal highlighting the critical aspects of the transaction which included company’s strengths, credit rating, etc.
  • Coinmen assisted in delinking the brand with rest of the group’s extended family and built in the right reasons for the decline in sales.
  • Furthermore, we arranged for fresh facility to the group from the country’s largest PSU lender, thus giving exit to the group’s existing two lenders.

Outcome Of The Transaction

The transaction resulted in the consolidation of bank limits, with reduction in ROI of more than 250 basis points, thus ensuring higher profitability as well as operational convenience for the company.