Neo Asset bids for Steel Exchange’s Rs 300-crore debt – ET Infra

MUMBAI: Neo Asset Management has bid to buy ₹300 crore of debt owed by Steel Exchange of India to Edelweiss Alternatives. The private credit loan will be used to refinance the existing debt, where the interest rate is 21.5%.

“Neo Asset Management has given a non-binding offer to acquire Steel Exchange of India’s outstanding debt of around ₹300 crore to refinance the existing high-cost debt owed to Edelweiss and fund working capital,” said a source. “Steel Exchange of India had borrowed the fund at 21.5% interest rate two years ago and the new loan could be cheaper by up to 200 basis points.” One basis point is 0.01 percentage point.

In a stock exchange filing, Steel Exchange of India said that Neo Asset Management and co-investors will acquire 3,828 debentures, with a total principal amount of ₹275 crore.

Both Neo and Steel Exchange of India spokespersons could not be reached for comment.

Besides refinancing the Edelweiss debt, the company will be issuing new NCDs of ₹100 crore which will carry a coupon of 18.75% and a tenor of 4.5 years where the coupon will be paid monthly and principal quarterly. During FY23, the company incurred a net loss, primarily due to high interest costs and depreciation expenses. However, the company managed to achieve a positive Pre-Buyout Interest, Depreciation, and Tax in FY23. The company’s financial performance deteriorated in the wake of an adverse steel cycle, diminished demand, and plummeting prices over the past four to five years. The account had turned non-performing back in December 2016.

The onset of Covid-19, coupled with challenges in securing working capital loans, further exacerbated the company’s financial woes, as highlighted in its financial statement.

The operations of Steel Exchange remained working capital-intensive, with the majority of funds allocated to inventory, followed by debtors, said Care Ratings in a report earlier this month.

  • Published On Oct 17, 2023 at 11:10 AM IST

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