Amtek Said in Refinance Talks as Bond Payment Deadline Ends

  • Company's 10.25% notes issued in 2010 matured on Sunday
  • Amtek reported temporary cash flow mismatch in August

Amtek Auto Ltd., an Indian auto-parts maker that reported a “temporary cash flow mismatch” last month, is in talks with creditors to refinance its debt as a deadline to pay 8 billion rupees ($122 million) of bonds passed Sunday, people familiar with the matter said.

The payment for the 10.25 percent notes issued in 2010 could still come through in coming days if the restructuring talks are successful, the people said, asking not to be identified as they aren’t authorized to speak on the subject. The debt won’t be treated as a non-performing asset by holding banks for 90 days, they said. Amtek spokesman Amman Kumar and Gautam Malhotra, a member of Amtek’s board, didn’t respond to requests seeking comments.

The New Delhi-based supplier of parts to automakers such as Ford Motor Co. and Maruti Suzuki India Ltd. roiled some creditors in India last month after a local rating company cut its credit score by four levels in one stroke. Shares of the company have plunged 70 percent since mid-August, while two local debt funds of JPMorgan Chase & Co. that bought Amtek debt restricted redemptions after a string of investors demanded their money back.

Any default by Amtek could be the first by a major Indian company since 2013, when Deccan Chronicle Holdings Ltd. failed to meet its rupee-denominated obligation.

Amtek’s Senior Managing Director John Flintham said this month the parts maker could raise as much as $1 billion over 15 months from the sale of some assets.

Shares of Amtek Auto rose 7.2 percent to 51.85 rupees in Mumbai.

Amtek Auto, founded in 1985, gets about 43 percent of its revenue from overseas, according to an investor presentation in April. The company, including units, has reported negative free cash flows for the past decade and has completed acquisition of eight assets mostly overseas since the start of 2013.

Excluding units, Amtek posted its first loss in 15 quarters in the three months through June, while sales fell to the lowest level in six quarters, according to data compiled by Bloomberg. Amtek Auto had $2.87 billion of borrowings at the end of September 2014, versus $187 million cash, according to a July company filing.

Standard & Poor’s on Sept. 15 cut the credit rating on the euro-denominated loans of Amtek’s Singapore-based unit Amtek Global Technologies to a level deemed distressed on concern the parent may default amid a liquidity crunch. On Sept. 18, S&P withdrew the rating saying it lacked information.

Spending on acquisitions, combined with high short-term debt and a low cash balance as of March 31, and losses in the quarter through June 30, have heightened liquidity risk at Amtek Auto, Standard & Poor’s said in a report. There’s a risk the company may not have sufficient liquidity to meet its interest or debt obligations, the rating company had said.

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