Amtek Auto MD steps down as debt woes mount

NEW DELHI: Amtek Auto’s board on Friday discussed ways to resolve debt repayment issues as the components maker faced the likelihood of falling under Insolvency and Bankruptcy Code as per Reserve Bank of India (RBI) guidelines.

The company also said its vice-chairman and managing director John Ernest Flintham and independent and non- executive director Sanjiv Bhasin have resigned with immediate effect, citing “unavoidable circumstances”.

The board of directors discussed the issue of the company falling under the Insolvency and Bankruptcy Code, 2016 under instructions by the RBI to the banks, Amtek Auto said in a BSE filing.

Under IBC, banks are required to resolve issues of bad loans within a stipulated timeframe failing which they would be asked to file insolvency proceedings against the defaulters. Amtek Auto has been struggling to make a turnaround ever since it reported “temporary cash flow mismatch” in 2015 and defaulted on payment of an estimated ₹ 800crore bond.

The company had last week announced plans to issue more than 2.6 crore shares to a lender as part of restructuring debt of ₹95.26 crore.

The company will seek shareholders nod for the proposal during the upcoming annual general meeting (AGM) on July 7.

If approved, Assets Care and Reconstruction Enterprise would have a stake of 9.75% in the auto component firm.

On the other hand, promoter group stake would come down to 47.29% from the current 52.39%.

In another development, Amtek said its board approved with requisite majority resignations of Flintham and Bhasin, with effect from June 23, 2017 due to their unavoidable circumstances.

The company stock today closed 0.48% down at ₹30.80 on BSE.