On Wednesday, Religare Enterprises said its arms Religare Finvest Limited would default on Rs 100 Crore NCD payment obligation, in order to subscribe to Axis Bank at the end of this month, because of the financial distress of former developers and officials’ misappropriation. The Rs 100 Crore borrowed from Axis Bank by NBFC Religare Finvest Limited (RFL) in September 2015, was put into private investment by placements of non-convertible debentures (NCDs). Religare Enterprises Ltd (REL) stated in the regulatory filing that the bonds are scheduled to expire on April 30th,with a coupon of 10.68 percent per year. RFL has been included in the RBI corrective action plan from January 18, 2018 because of the problems arising out of syphoning and misappropriation of funds by erstwhile promoters and their partners. It was in financial distress, primarily because the erstwhile promoters Shivinder Singh and his brother Malvinder Singh allegedly misused funds.
“Therefore, RFL faces major asset liability discrepancies. In the process of submitting to its lenders the revised debt resolution plan, RFL is revitalising its business and ensuring the proper alignment of its asset liability profile; “the company noted. In the light of these facts, the company stated that “at the approaching maturity date of April 30, 2021, it appears to be difficult for the RFL to provide/pay interest and the principal amount of the above-noted NCDs to an eligible holder.” Axis Bank and Axis Trustee were told that there would be a potential default on Tuesday (Axis Trustee Service Ltd) (April 13, 2021). “We would like to inform you that the company had borrowed funds from Axis Bank through the private investment of NCDs and the enterprise is unable to provide its interest and principal on the approximate maturity of April 30th, 2021.” RFL said to Axis Bank and Axis Trustee Service. Axis Bank is also a signatory to the ICA agreement between lenders/bankers, which was signed in July 2019 under the DR plan. In February 2020, Axis Bank approved RFL’s debt settlement plan.
“We have also informed you, together with all our lenders of the revised plan for DR with Religare Enterprises as RFL promoter and are also seeking the approval and implementation of this plan with all your support,” according to the copy sent to Axis Bank. The bonds are included in the BSE list.
