Mumbai: Delhi-based Amtek Auto Ltd is in advanced discussions with financial institutions to take a fresh loan and repay 800 crore of bonds coming up for redemption on 20 September, two people familiar with the discussions said.

The loan will help buy the company time as it struggles with high debt and dwindling sales, one of the persons said.

“The negotiations are still on regarding the tenure of these loans. There will be a cap on the loans and it will most likely replace the bonds which are due," said the second person.

“The final solution is selling assets, but that will take some time, so this is a interim arrangement," the second person added.

Gautam Malhotra, managing director at Amtek Auto, did not respond to calls on his mobile phone and an SMS seeking comment.

The Delhi-based company sold 800 crore of bonds at a coupon rate of 10.25%, its largest such sale in the local market in 2010. These bonds are coming up for redemption on 20 September, according to data from Bloomberg.

Over the past month, bankers and bondholders have been worried whether the company will be able to make good on the repayments, given its deteriorating financials.

Amtek reported a surprise loss of 157.6 crore in the June quarter. In the March quarter, the company had reported a profit of 127.82 crore, while net profit in the June 2014 quarter was at 223.17 crore.

As of March, the company had total debt of 7,844.12 crore. Amtek Auto’s interest coverage ratio, a measure of how easily firms can meet their interest costs, has slipped from 7.28 in March 2008, to as low as 0.09 times at the end of June.

Amtek Auto gained 11.33% to close at 30.45 on Wednesday on BSE, while the benchmark Sensex gained 1.59% to close at 25,719.58 points.

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