The Amtek Auto stock has shot up by over 12 per cent so far today. The company announced after market hours yesterday that it has appointed Morgan Stanley as advisors for their debt reduction plan and also that there have been a large number of enquiries for the outright purchase of a couple of the company’s overseas businesses. About Rs 800 crore of debt was due for repayment in the third week of September 2015, for the repayment of which negotiations are still on. The company has about 80 lenders, including banks and JP Morgan Mutual Fund, for these bonds.
Amtek Auto has been in trouble since mid-June when it was reported that the company was facing a liquidity crunch and was unable to service its debt (about Rs. 17,600 crore as of March 2015 for the Amtek Group).
In the June 2015 quarter, Amtek Auto posted a loss of Rs 157 crore, with interest costs doubling over the year-ago period. This led to rating agencies downgrading the company’s debt. The stock has also been under pressure since early August, when group company Castex Technologies was accused of artificially pushing up its stock price to trigger a clause that permitted conversion of its FCCBs worth about Rs. 530 crore. To help tide over the crisis, about Rs. 75 crore was pumped in by promoters through a preferential allotment. The company also announced plans to raise $1 billion (about Rs. 6,500 crore) from stake sale in overseas group companies as well as sale of non-core assets in the next 12-15 months.