A valuable asset does not solve a debt problem if it cannot generate cash before the debt falls due for long term projects, like infrastructure projects and engineering groups. Projects, operating businesses and long-term investments may take years to generate or release cash, while holding-company debt falls due on a fixed date. The group has to turn its assets into cash, refinance the debt or extend the maturity before the choices become more limited. This issue arose for an Indian infrastructure and engineering group whose substantial debt maturity was approaching in 2026. The group ultimately refinanced that debt with new financing, including private-credit funding.
The Maturity Date Was Built Into the Financing
In 2023, the group’s holding company raised substantial secured financing through zero-coupon non-convertible debentures. Under these instruments, the borrower did not make regular cash-interest payments during the term. Instead of paying interest regularly, the company was required to pay the accumulated amount when the debt became due.
This meant the company had lower cash payments while the financing was running, but a much larger payment at the end. By mid-2026, borrowing of more than INR 10,000 crore had grown by a further INR 1,000 crore by the time it had to be repaid.
This type of borrowing can work if the company knows where the repayment money will come from. It may expect to sell an asset, complete an IPO or receive cash from its operating companies. The problem is that the repayment date is fixed, while those events can be delayed.
A holding company may depend on dividends from operating businesses, stake sales or further borrowing to meet its own obligations. A valuable operating asset can therefore contribute substantial value to the group without producing enough cash when the holding-company debt falls due.
When the financing is raised, the board should test each proposed source of repayment against realistic timing. How long could an asset sale take? What happens if an IPO is delayed by six months? What source would repay the debt if the expected transaction does not close on time? Those questions extend beyond the expected transaction itself. The board also needs to know what financing or liquidity remains available if the primary repayment event is delayed.
Those questions also need to be checked against the financing documents. If repayment depends on selling a pledged asset, can the security be released in time? If it depends on new borrowing, do existing negative covenants restrict additional debt? If it depends on distributions from an operating subsidiary, are there contractual restrictions on those distributions? The repayment plan therefore needs to work with the financing documents, not just the company’s cash-flow assumptions.
Short-term debt is not necessarily inappropriate. The repayment plan must, however, be credible against the time those assets are actually expected to generate cash. The issue is therefore not simply the length of the debt, but whether its maturity matches the period in which the underlying assets can realistically generate or release cash.
Asset Monetisation Is Not Immediate Liquidity
Selling assets can reduce debt, but deciding to sell an asset does not put cash in the bank immediately. The important question is whether the sale can be completed before the debt has to be paid. Before the 2026 refinancing, the group had already pursued significant asset sales and other monetisation transactions. These transactions generated substantial proceeds for debt reduction and reduced leverage, but a significant maturity obligation remained outstanding.
An asset can have substantial value without being capable of generating cash immediately. A sale still requires a buyer, an agreed price, the necessary approvals, release of existing security and completion of the transfer. An IPO is similarly dependent on market conditions, regulatory approvals and the time required to complete the process.
A proposed sale may also involve steps that affect when the proceeds can actually be used. Lender consent may be required. An existing pledge may need to be released. Transfer conditions may need to be satisfied, or the proceeds may have to pass through an agreed escrow. If those requirements are identified only when the sale is being negotiated, the debt may fall due before the proceeds are available for repayment.
An asset sale solves a refinancing problem only if the proceeds arrive before the debt falls due. Eighteen months before maturity, the group may still have time to approach multiple buyers or consider different transaction structures. Thirty days before maturity, the same sale is likely to be negotiated under much greater time pressure. The difference is therefore not simply the number of days available. It is whether the company still has time to consider the buyer, price, approvals and financing implications of the transaction before committing to it.
The loan documents may also require the money from a sale to be used directly to repay lenders. The company therefore cannot assume that cash from an asset sale will be available for any purpose it chooses.
The board should therefore compare the expected timing of each sale or listing with the dates on which debt becomes payable. It should model lower valuations, delayed approvals and partial sales. Starting earlier cannot guarantee completion, but it leaves another route available if the preferred transaction is delayed. It also gives the board time to determine whether additional financing is needed before the asset transaction is completed. It also gives the company time to determine whether the asset sale can be completed before maturity or whether interim financing, an extension or another way of raising cash is needed.
Collateral Must Have a Route to Cash
Giving a lender a valuable asset as security does not mean the lender can easily turn that asset into cash. The asset may be valuable, but there may still be restrictions on selling or transferring it.
The debt in this case was supported by major group assets and equity interests. The assets worth was not important here but how easily they could actually be sold or used when refinancing or repayment was required.
The financing parties therefore need to understand how the asset could actually be valued, transferred and realised if enforcement becomes necessary. Shares may carry transfer restrictions, shareholder rights or approval requirements.A pledge can give a lender security over an asset without ensuring that the asset can be realised quickly or at the value assumed when the financing was arranged.
For a holding company, this distinction can be particularly important. The collateral may be an equity interest in an operating business rather than an asset that can simply be sold. The stake may be valuable, but selling or enforcing it can depend on transfer restrictions, shareholder arrangements, approvals and the terms of the security documents.
These restrictions can affect the value that lenders are prepared to attribute to the collateral. Additional security may also restrict future refinancing or asset sales. Pledging shares in a significant operating business can also raise questions about control if the security is enforced. Existing security may also restrict the borrower’s ability to use the same asset in a subsequent refinancing.
The financing documents should address several practical questions: who owns the asset, whether it can be transferred, who must consent, how it will be valued, whether replacement collateral can be provided without leaving lenders temporarily unprotected, and what happens if the borrower needs to refinance before an enforcement event.
These questions need to be addressed when the financing is first put in place. Security documents should support a realistic route to enforcement and recovery, rather than merely recording a legal interest in a valuable asset. The security package should also be considered against the possibility of a future refinancing. A security package that protects the lender at one stage can become an obstacle to a later asset sale or refinancing if the documents do not provide workable release and substitution mechanics.
The same issue arises when the company is trying to refinance. Existing lenders may need to release or substitute security before new lenders can take it. If that cannot be done in time, the asset may be valuable but still unavailable to support the new financing. Security therefore matters not only when a default occurs. It can also affect the company’s ability to refinance later.
When Refinancing Becomes the Repayment Plan
If the company cannot generate enough cash before the debt falls due, new borrowing can become the way the old borrowing is repaid.
In this case, as the repayment date approached, the group negotiated extensions and eventually raised new financing backed by private-credit investors, which is, borrowing from investors outside the usual bank-lending route.
Private credit can provide capital where conventional bank financing may be constrained, but it can also come at a higher cost and with tighter contractual conditions. The question is therefore not simply whether the company can raise the money. It is what the new financing gives the company in return for that cost and security: more time, committed capital or enough time to complete an asset sale.
That additional flexibility came with high financing costs. The refinancing involved multiple funding sources, high financing costs and substantial collateral. Where financing is raised in more than one currency, the company also needs to consider the currency exposure against its predominantly rupee cash flows and the cost of managing it.
The refinancing’s immediate benefit was time. It replaced the immediate maturity with a longer period in which the group could refinance, sell assets or generate cash. It also preserved the group’s ability to continue monetising assets. It did not remove the need to generate repayment cash.
The cost of such refinancing therefore needs to be assessed against what the additional funding period makes possible.The relevant consideration is not pricing alone. The board also needs to assess what the financing provides in return: additional time, committed capital, access to a wider pool of lenders or sufficient time to complete an asset sale.
Close to maturity, discussions with potential lenders are not enough. The board needs committed financing, documented extensions where required and all necessary approvals in place. It also needs to understand which additional assets are being pledged and what restrictions that creates for future transactions.Cross-default provisions also need to be reviewed because a default under one financing arrangement can trigger rights under another. The new financing should also be tested for fresh maturity concentrations, security restrictions and covenant requirements that could recreate the same pressure later.
A refinancing can therefore move the maturity date without solving the repayment problem. A new three-year obligation still requires a credible source of repayment within those three years. If the new financing also requires an asset sale, additional security or restricts further borrowing, those terms will also affect the company’s next financing decision.
The negotiating position can be very different eighteen months before maturity. More time allows the group to approach a wider range of lenders, consider alternative security and negotiate different repayment structures. As maturity approaches, time pressure can progressively narrow those choices. Earlier refinancing does not guarantee cheaper financing or more favourable terms. It does, however, leave more time to compare structures and pursue another route if the first refinancing does not proceed.
Keeping Operating Businesses Financeable
A debt problem at the holding company does not have to become a debt problem for every business in the group. Whether it spreads depends partly on how the different companies have borrowed and what they have promised to support.
Whether the healthy operating businesses can remain separate while the holding company deals with its own debt is how this problem is dealt with.
For example, a project company may borrow against its own project and revenues, while the holding company borrows against its investments. But if one company has guaranteed another company’s debt, or if a default in one place triggers a default elsewhere, that separation can break down.
Keeping those liabilities, assets and cash flows contractually separate can help contain financial problems within the relevant entity. That separation can help protect otherwise healthy businesses while the holding company refinances its own debt. However, shared guarantees, pledged subsidiary shares and broad default clauses can reconnect them. The practical protection therefore depends not only on the corporate structure but on whether the financing documents respect that separation.
For example, a project company may have long-term project revenues available to service its own debt, while the holding company relies on the value of its investment in that project company. If the holding company has pledged the subsidiary’s shares, guaranteed its obligations or agreed to broad cross-default provisions, a problem at one level can affect the other.
The group structure can therefore help keep the financing separate only if the financing documents allow it. HoldCo, OpCo and project-level financing may need to be considered together where guarantees, pledged equity, cash-pooling arrangements, upstream obligations or cross-default provisions can allow a problem at one level to affect another.
What the Refinancing Actually Resolved
The 2026 transaction removed the immediate maturity pressure and replaced it with longer-dated financing. Additional collateral and private-credit funding gave the group more time to meet its obligations and complete its asset plans. The refinancing also illustrated what can happen when replacement financing is arranged close to the point at which the original debt falls due.
Earlier in the process, the group may have more alternatives available.Debt may be extended, spread across different maturities or partly replaced with equity-linked capital. Assets can also be prepared for sale without the same pressure from an approaching repayment date. A borrower may also be able to approach different lender groups, restructure security or separate financing needs across different entities while there is still time to negotiate those arrangements.
These alternatives are not interchangeable. Extending debt changes when the borrowing has to be repaid. Equity-linked capital changes the ownership or repayment terms. An asset sale converts an investment into cash but may require releases, approvals and time to complete. Separating financing across entities can protect an operating business, but only if the guarantees and security arrangements allow the entities to remain separate. The question is therefore which combination fits the assets, cash flows and existing contractual arrangements.
None of these options guarantees a lower-cost outcome. Their availability will depend on market conditions, asset valuations, existing financing documents and the willingness of creditors to agree. Starting earlier gives the company time to assess those alternatives before one financing route becomes the only practical option. It also gives the company time to establish which routes are genuinely executable rather than relying on an expected transaction that may not close on schedule.
Long-term infrastructure assets can be financed with shorter-term debt, but only where there is a credible plan for converting asset value into cash when the debt falls due. That plan is tested when an IPO is delayed, an asset sale takes longer than expected or refinancing conditions change.
A financing structure therefore needs to work even when the assumptions made at signing no longer hold. If an expected listing is delayed, an asset sale produces less than expected or refinancing becomes more difficult, the company should still have a way to meet the next repayment or arrange the next financing.
For infrastructure groups, long-term assets can support shorter-term debt. The question is whether the company has enough time to turn those assets into cash before the debt falls due. That may require an asset sale, refinancing, additional financing or another source of cash. The maturity dates, asset sales, security, group structure and financing documents therefore need to be looked at together.
The financing structure therefore needs to do more than address the immediate maturity. It should also leave the company with options if the expected asset sale, refinancing or cash generation does not happen as planned.
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