KARACHI: Telecard is a tech company that is planning to take its subsidiary, Supernet public in an IPO. However, the IPO has been delayed for a while considering the company considering the debt on the balance sheet. The company had raised Rs 2.4 billion through its TeleTFC, and has managed to pay back Rs1.7 billion to the creditors so far.
It is expected that the remaining Rs700 million owed to creditors will also be repaid. However, that will be done following restructuring of the outstanding TFC loan.
Term Finance Certificate is basically like a loan that has to be repaid within a particular term as the name suggests.
What is debt restructuring?
When terms of a loan are altered after mutual agreement between both parties, a loan is said to be restructured. Usually, when a loan is restructured, it is more favorable for the borrower in the form of a lower interest rate or monthly payment. Getting a loan restructured, however, is done when the borrower can no longer afford to repay the loan under the old terms and conditions. Instead of writing off the loan as a bad debt completely, creditors then restructure the loan so that they get their money back.
When a company restructures its debt, it is usually believed that the company is under distress to meet its obligations. It is not a great sign. However, renegotiating terms allows the company to restore its liquidity, pay off its creditors and avoid bankruptcy.
Not only is the interest rate brought down, but sometimes the...
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