Thursday, July 25, 2024

Edelweiss Special Opportunities Fund Extends Rs 350 Crore Debt Facility to Adarsh Developers’ Entity for Project Completion and Debt Repayment

Edelweiss Special Opportunities Fund has extended a Rs 350 crore debt facility to Shreshta Infra Projects Pvt Ltd, a Bengaluru-based real estate company affiliated with Adarsh Developers. The funds will be utilized to complete two ongoing projects and settle debts owed to Oaktree Capital. The debt is structured as listed secured and rated non-convertible bonds with a tenor of 41 months and 24 days, bearing an annual interest rate of 20.5%. Prepayment penalties apply if redeemed within one year of issuance.

Shreshta Infra, a special purpose vehicle created by Adarsh Developers, plans to allocate Rs 200 crore to its affiliates—Adarsh Nivaas Pvt Ltd and Adarsh Realty and Hotels Pvt Ltd—in the form of compulsorily convertible debentures. These affiliates will use the funds to repay debts incurred from Oaktree Capital two years ago. The remaining Rs 150 crore will be utilized by Shreshta Infra for various purposes, including Rs 50 crore for financing AWP Villas and AWP Apartments projects and Rs 100 crore for general corporate needs.

According to project cost limits, AWP Villas should not exceed Rs 285 crore, and AWP Apartments should not exceed Rs 657 crore. However, cost escalation is allowed if incremental revenue surpasses specified thresholds.

Notably, the Edelweiss Group, in the past, extended funding to the Shreshta Group through its funds. As of December 31, 2023, the real estate company had outstanding amounts of Rs 57.3 crore and Rs 127.7 crore to ISAF III Onshore Fund and India Special Assets Funds III, respectively. The collateral for the Rs 185 crore funding by these funds is ringfenced and bankruptcy remote, secured against already sold inventory.

Acuite Ratings assigned a ‘Acuite B Stable’ rating to the Rs 350 crore bonds of Shreshta Infra on December 29. As of March 31, 2023, the Adarsh group reported total sales receivables of Rs 1,034 crore, committed receivables of Rs 866 crore from unsold inventory, and a cash and bank balance of Rs 54.8 crore, according to Acuite’s rating report. The Edelweiss Group has not responded to requests for comments on the matter.

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