TRG Pakistan says indirect portfolio company Afiniti has agreed ‘comprehensive restructuring plan’
TRG Pakistan, being a shareholder in The Resource Group International (TRGI), announced on Friday that its indirect and TRGI’s portfolio company Afiniti, based in Washington DC, has agreed with its senior leaders a comprehensive restructuring plan that would “significantly enhance Afiniti’s financial position and growth prospects in the AI technology industry”.
The restructuring plan includes a significant reduction of Afiniti’s current senior and multi-year extension of debt maturity. It will also result in lower cash interest expense and feature recapitalization of its balance sheet, the notice sent to the PSX on Friday stated.
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“This restructuring provides significant value and upside potential for TRG Pakistan whose indirect economic stake in Afiniti will be substantially retained in percentage terms on a fully-diluted basis.”
The notice added that further details will be provided around the closing of the Afiniti restructuring transaction, which is also subject to court approval in Bemuda and the US, and expected to happen before year-end.
The market saw the notice, issued before trading began, as a positive development as TRG Pakistan’s share price jumped in the opening few minutes to hit a high of Rs56.75, up from Rs55.3.
At the mid-session break, however, price had dropped near Rs54.55.
Meanwhile, the announcement looks to bring to an end uncertainty surrounding the debt restructuring of the customer experience AI pioneer that has been weighing over the past year on investors in TRG Pakistan given the hundreds of millions of dollars that Afiniti had reportedly taken on in prior years to fund a rapid buildup of costs.
According to an analyst, debt restructuring negotiations are complex and require the balancing of interests of many sides, all while preserving the value of the business.
“By cleaning up the unsustainable leverage, all parties that negotiated the transaction have created a platform for Afiniti to resume growth in a focused manner and without the burden of high interest payments,” the analyst added.
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