NARCL Offers Bid To Buy Debt Of Three Bankrupt Companies

Lenders have received base bids from National Asset Reconstruction Company Ltd (NARCL) for the bad loan accounts of Hitodi Infra, Sion Panvel Tollways and Morarjee Textile. The total consolidated debt of these accounts is more than 4,000 crore.

For Hitodi Infra, lenders have initiated a Swiss challenge auction based on binding bids from the government-backed bad bank. The lenders, including Bank of Baroda, ICICI Bank, Axis Bank, Bank of India, IDBI Bank, and State Bank of India, have appointed BoB Capital as the process advisor. NARCL has offered Rs 465 crore for the outstanding loans of Rs 2,101 crore.

Bidders have been asked to bid either in cash or on a cash-and-security receipt basis. NARCL buys debt under a 15:85 structure where 15 per cent is paid in cash and 85 per cent in security receipts. The minimum markup will be 5 per cent of the anchor bid. The Swiss auction will be held on 26 March 2024.

Security receipts are instruments issued by asset reconstruction companies for the purchase of stressed debt, showing interest in the underlying assets. Hithodi Infra is a company formed between Patel Engineering (PEL) and an Eight Capital Group entity. According to an Acuite Ratings and Research report, it was formed to reduce the debt burden of PEL.

Morarjee Textile, which has an integrated manufacturing plant in Nagpur, was admitted for bankruptcy by the National Company Law Tribunal Mumbai last month. This was on an application by Axis Bank. The tribunal has appointed Ravi Sethia as the resolution professional. The company had a debt of 405 crore, according to a Brickwork Ratings report of January 2021.

Sion Panvel Tollways is a special-purpose vehicle formed for managing the road connecting Mumbai and Navi Mumbai. It has been facing financial difficulties due to an ongoing dispute with the Maharashtra government. In December, NARCL offered lenders Rs 220 crore for the company's debt of Rs 1,700 crore.

Earlier, NARCL had offered anchor bids based on which IDBI Capital is running mandates for four other non-performing loans: Rohtak Hissar Tollways, Pink City Expressway, Metenere, and Haridwar Highways Project. NARCL's offer had triggered a Swiss auction for these assets.