The Amtek Auto stock shot up by over 70 per cent intra-day on Friday, after the company allayed investor fears of a possible default on debt. Amtek Auto has been in trouble since mid-June when it was reported that the company was facing a liquidity crunch and an inability to service its debt (about ₹17,600 crore as of March 2015).
In the recent June 2015 quarter, Amtek Auto posted a loss of ₹157 crore, with interest costs doubling over the year-ago period. Rating agencies downgraded the company’s debt after this. 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 $200 million (about ₹1,300 crore).
On Friday, Amtek Auto’s management assuaged debt default worries. The company announced that it is the process of securing fresh loans to repay bonds worth ₹800 crore coming up for redemption on September 20.
Besides, while about ₹75 crore has been pumped in by promoters through a preferential allotment, the company also plans to raise $1 billion (about ₹6,500 crore) from stake sale in overseas group companies as well as sale of non-core assets in the next 12-15 months.