Corporate Guarantee to Nellao Subam Packaging LLP In which Company hold contribution and profit sharing of ratio of 80%
Price
▲ positive · ▼ negative · ● neutral filings · teal = economic event · numbered = multiple that day (click to pick). Times IST.
Subam Papers Limited has decided to provide a corporate guarantee of Rs. 11.70 crore to HDFC Bank. This guarantee secures credit facilities extended to Nellai Subam Packaging LLP, a firm in which Subam Papers holds an 80% contribution and profit-sharing stake as a Designated Partner. The facilities consist of a Cash Credit (CC) limit of Rs. 4.00 crore and a Term Loan of Rs. 7.70 crore. The company states the transaction is at arm's length and that promoters have no interest in the deal. The guarantee creates a contingent liability for Subam Papers if the LLP fails to meet its repayment obligations to the bank.
Shareholders should note this guarantee creates a contingent liability of Rs. 11.70 crore on Subam Papers' balance sheet, meaning the company could be on the hook if its 80%-owned subsidiary defaults. While the company says there is no immediate impact, the exposure is material relative to the credit amounts involved.