Srei bondholders appeal NCLT order on redemption moratorium

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MUMBAI: Bondholders of the Srei Group have moved the National Company Law Appeal Tribunal (NCLAT) against an order from the Kolkata bench of the National Company Law Tribunal (NCLT) which allowed Srei Equipment Finance Ltd (SEFL), which makes part of Srei Groupto skip refunds from January 1 to June 30.

Acting on behalf of bondholders, debenture trustees Axis Trustee Services Ltd and Catalyst Trusteeship Ltd together moved the appeal court against the NCLT order which hit retail and institutional investors alike.

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Retail investors were particularly affected by the decision to halt redemption which he said was aimed at addressing asset-liability mismatches that have arisen as a result of the covid-19 pandemic. So far, the Kolkata-based non-bank financier has missed repayments in eight cases between January 11 and February 15, according to available data.

The appeal is due to be heard on March 3, according to information available on the NCLAT website.

“This is to inform you that in order to protect the rights and interests of the debenture holders, Catalyst Trusteeship Ltd has preferred a class appeal before NCLAT challenging in particular the contested order dated December 30, 2020 passed by NCLT, Kolkata in the petition… by SREI Equipment Finance Ltd,” Catalyst Trusteeship said in a statement.

Apart from bank loans, the company is estimated to have outstanding market-linked debt securities worth Rs 499 crore, including money invested by retail investors.

According to a January 16 Moneylife report, Axis Trustee Services had written to the bondholders seeking their views on the challenge to Kolkata’s NCLT order with the appeals authority.

As part of the plan of arrangement, Srei has offered to make repayments to various categories of bondholders over an extended period. Retail investors will receive their accrued interest during the moratorium period within 15 days of its end. This scheme of arrangement, Srei said on December 31, is a “natural consequence” of the first scheme that SEFL offered to banks and financial institutions and is pending before the NCLT.

The new plan will encompass all of its secured and unsecured non-convertible debenture holders, all foreign lenders from whom the company has secured or unsecured external commercial borrowings, and all perpetual debenture holders.

Meanwhile, the Srei Group’s proposal to transfer assets into Srei Equipment Finance has yet to be approved by all lenders. In a July 2019 regulatory filing, Srei said it had decided to consolidate the lending business into Srei Equipment Finance “since the focus over the past four years has been on growing equipment finance and shrinking the loan portfolio. infrastructure”.

“The proposed step will also enable the lending entity, Srei Equipment, to attract strategic investors and also prepare the business for conversion into a bank, as the Reserve Bank of India (RBI) will decide whether to allow the conversion,” the company said. said in July 2019.

Srei Infrastructure Finance Ltd recorded a consolidated net loss of Rs 3,810.93 crore in the December quarter of FY21 due to higher and accelerated provisioning.

“Due to the covid-19 pandemic, the extended lockdown, the extension of the moratorium to borrowers and operational tenants, the unavailability of the lender moratorium and loan loss provision, the activity of Srei Equipment Finance Ltd (SEFL) suffered losses and cash flow mismatch in the nine months ended December 31, 2020 and its net worth declined,” the company said in its notes to the financial statements. February 13.

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