CARE has revised its ratings of Srei Infrastructure Finance’s (SIFL) bank facilities, long term infrastructure bonds and non convertible debentures to credit watch with negative implications.

The rating agency said the revision takes into account the developing implications of the slump exchange for the transfer of lending business, interest earning business and lease business of SIFL to its wholly owned subsidiary Srei Equipment Finance (SEFL).

SEFL has approached NCLT, Calcutta, with a scheme of arrangement to obtain formal consent from the required majority of lenders for the slump exchange and also for restructuring of its liabilities, including a part of the debt transferred from SIFL.

“The ratings of SIFL were under credit watch with developing implications pending the outcome of the proposed meetings of creditors for considering the scheme of arrangement according to the NCLT order dated October 21, 2020 received by SEFL,” CARE Ratings said in a statement.

The revision in ratings also takes into account further deterioration in the liquidity position and fund raising ability which has substantially impacted the consolidated credit risk profile of the company with SEFL.

SEFL had approached the lenders for restructuring of its bank facilities (including transferred from SIFL).

The ratings firm further said the current development with respect to the special audit initiated by the RBI for both SIFL and SEFL and concerns on the outcome of the same have impacted the fund raising ability and may also impact the implementation of the scheme of arrangement proposed by SEFL.

“There is no clarity as yet on the stance of the consortium on the slump exchange and restructuring scheme. A likely delay and lack of unanimity among the creditorsmay further impact the consolidated credit risk profile of the company.”