ICICI Bank-promoted 3i Infotech is in talks with lenders to recast the Rs 600-crore short-term debt on its books as long-term debt.
The endeavour is to increase the tenure of the debt to around five years from about two years at present, Mr Amar Chintopanth, Joint Managing Director and Chief Financial Officer, told Business Line .
“We will try to change the short-term maturities into long-term maturities so that it matches our cash generation cycles…we are confident that that our cash generation over the next five-six years will be adequate enough to take care of all these things,” said Mr Chintopanth.
Though the debt-recasting may result in the company paying higher interest rates, it will be a breather in terms of repayment ticket sizes and repayment schedules, analysts said.
As on June 30, 3i Infotech had a gross debt of Rs 1,900 crore, of which Rs 450 crore or $100 million was the component of foreign-currency convertible bonds (FCCB) raised in 2007. Apart from Rs 600 crore of short-term debt, it also has a cash credit of Rs 300 crore and a long-term debt of Rs 550 crore.
Stark Variance
The company is looking to refinance the FCCBs considering the stark variance in the conversion price and the current market price of 3i Infotech's shares. While the conversion price was around Rs 166, 3i Infotech's shares closed at Rs 28.95 on Tuesday on the Bombay Stock Exchange.
“We are looking at replacement debt…it could either be through external commercial borrowings or foreign debt…,” said Mr Chintopanth.
3i Infotech is also open to the idea of floating global depository receipts (GDR) to reduce its debt.
The company's debt position came down to Rs 1,900 crore from Rs 2,450 crore, thanks to the sale of its US-based billing-and-payments unit earlier this year for a consideration of $137 million.
3i Infotech's global billing unit comprises businesses from the erstwhile Regulus (acquired in April 2008 for $80 million, with the option of an additional, parameter-linked $20-million consideration) and J&B Software (bought for $25.25 million in 2007).
With this divestment, 3i Infotech has now exited from the transactions-processing business completely. “This business never recovered from the meltdown of 2008. We would have had to make more investments in the business if we wanted it to grow or even maintain existing levels. Since our core business was more important for us to invest in, we looked at a divestment opportunity,” said Mr Chintopanth.