Case Study - Entertainment Industry
Situation
- A listed company in media and entertainment industry
- Business operations were discontinued and there were delays in servicing with its existing lender
- The company decided to sell its land parcel to a renowned estate fund for which Labour NOC and certificate u/s 281 from Income Tax authority were required
- The Agreement was a non binding arrangement allowing the fund to walk away at anytime without any penalty.
Challenges
- Time was an essence as breach of timelines would let the company lose massive deal worth INR 2.51 billion.
- Neither company nor promoters had funds to even process the transaction nor credibility to service the debt from regular cashflow.
- Current delays with its existing lenders
- Expected flow from a non-binding agreement.
- Though listed but ideally had no market for promoter pledge being thinly traded stock.
- End use being beyond banking purview.
Normal Solution
- Existing lenders could have opted for restructuring but since the business operations were halted, restructuring was out of question
- Liquidation of assets to salvage value but not possible as buyer would anyways require these NOC for title of the land.
- Private loan from HNI which shall be way expensive but still highly doubtful.
3S Value Add
- Even with delays with existing lender, convincing lender to lend and agree to structure the transaction.
- Sanction within 36 hours and 100% disbursement within 20 days.
- Structured enough war chest fund for future contingencies.
- Arranging bank finance for better interest rate
- Built confirmation and addendum to add comfort to the transaction
3S Impact
- Deal closed successfully within record time which helped company to be within timelines as per the non- binding agreement with the fund and save the agreement.
- Existing lender account resolved without takeover thereby saving cost.