The Adani Group is in talks with promoters of Simplex Infrastructures to take equity exposure in the latter through a fresh share sale. A couple of private equity investors have also expressed interest in Simplex Infra, which has started defaulting bank loans owing to liquidity squeeze on delay on payment from government agencies, two people familiar with the matter said.
The move is part of a stressed asset resolution plan that Simplex Infra management is working on.
Among investors keen on investing in the infrastructure company, Gautam Adani-led business conglomerate appears to be the front runner, the people cited above said.
The resolution plan, being worked upon in consultation with lenders, includes restructuring of the existing loans and capital raising through qualified institutional placement (QIP) or private placement of equity shares. At the end of January, the company had outstanding borrowing of Rs 3600 crore from a United Bank of India-led consortium of 28 lenders.
“Bringing a new investor on the board is our first priority,” a company official, who is close to the Simplex Infra promoters, said.
“We have already executed an NDA (non-disclosure agreement) with an investor who has shown commitment to invest in the company and bullish about the company’s growth story and the country’s EPC (engineering, procurement and construction) space. The investment may be through the QIP route or private placement,” the company official said.
The Adani Group has interests in the country’s infrastructure space. Adani Infra (India) Ltd took shape as the in-house EPC arm of Adani Power and executes all its projects.
An Adani Group spokesperson refused to comment on the matter.
If the talks fructify, the promoters holding would be diluted from the present 49.8 per cent, a senior Simplex Infra official said. At present, the balance is held by public at large. The official further said that the company is exploring options including a situation where the shareholding of existing promoter, the new investor and the public would be equal – 33.33 per cent each after capital infusion.
The Mundhra family, the current promoter, took it over in 1947. Their shareholding grew to the current level from 49.29 per cent in 2018 through a Rs 400-crore QIP.
The company is believed to have hired SBI Capital Markets as the merchant banker for the latest exercise, while Khaitan & Co has been advising the company on all legal issues.
The resolution plan is yet to be finalised and the terms and conditions are being discussed, a senior bank executive said.
“Investors are conducting due diligence so they can support the business and take benefit of the future business potential which our company offers in the EPC segment. The due diligence takes 3-4 months.
“Banks are also supporting our initiative and are not in favour of referring the company to NCLT,” he said. Restructuring of the loan accounts is also being worked out.
Simplex Infra signed an inter-creditor agreement (ICA) with lenders in November last year, mandatory under the new regulatory framework for stressed asset resolution.
The company reported a net loss of Rs 31.25 crore for the December quarter against a profit of Rs 36.25 crore the year ago. Simplex shares closed on Wednesday 4.96 per cent higher at Rs 51.85 on BSE.
Source: Economic Times