The company, which has to pay ₹1,400 crore in interest this month, has sought a four-month window to allow it to sell some assets and ensure the payment at 18.75%.
In a letter seeking consent from bondholders on May 18, Goswami Infratech has requested them to extend the deadline to September 30, 2024. This involves updating the agreement to push back the date when extra costs or higher interest rates would apply under the original agreement. The extension will give it more time to manage the debt without facing immediate financial penalties.
“There was a pushback from some holders of the bond and, therefore, the SP Group has tried to sweeten the deal for them,” said a person in the know.
Large private credit funds including Varde Partners, Davidson Kempner, Canyon Capital, Cerberus Capital and Deutsche Bank had invested in the rupee-denominated bond, borrowed primarily against the SP Group’s shares in Tata Sons and Afcons. Goswami Infratech has informed its bondholders that the SP Group is in the process of securing a loan facility from a new lender through its main investment vehicle, Sterling Investment Corp. “However, even upon consummation of the transaction with the new lender, it shall only be possible to repay a part of the existing sterling indebtedness as the amount available from the new lender shall be less than the outstanding Sterling indebtedness,” it said.On May 10, it had written to the bondholders seeking to tweak a debt covenant. Unlike that letter, the company has now offered a higher payout to push back the trigger date when higher interest rates would apply.In June 2023, Goswami Infratech raised ₹14,300 crore through zero-coupon bonds maturing in April 2026, offering an 18.75% redemption premium. These bonds included a so-called ‘most favoured nation’ (MFN) clause, suggesting that if any SP Group affiliate borrows at a higher rate after May 26, 2024, Goswami Infratech must offer the same return to its bondholders. The date, May 26, 2024, is referred to as the ‘trigger date’.
According to the debenture trust deed, the MFN trigger event is defined as the earlier of May 26, 2024, or the date of raising sterling indebtedness. However, the company has indicated that it may not be able to fulfil this obligation as specified.
Also, the bond terms stipulate that yields will rise by 200 basis points if Goswami Infratech fails to raise funds by listing its affiliate company, Afcons Infrastructure, by the end of June. The SP Group was to repay part of its debt by monetising Afcons Infrastructure, which has already filed a draft prospectus with the market regulator for listing. Earlier it had to monetise Gopalpur Port by December 2023, which it monetised in March 2024 by selling it to Adani Ports.