Bad loan aggregator Acre ARC has completed the sale of ₹3,857 crore debt of Nagarjuna Fertilizers and Chemicals to AM Green Ammonia for a cash consideration of ₹1,685 crore, making an absolute return of more more than 88% of the ₹896 crore the ARC had paid to a seven-bank consortium in March last year.
With this deal, AM Green, an arm of Hyderabad-based renewable energy company Greenko will take control of the assets of the company. Acre ARC declined to comment when reached.
The company will sign a commercial agreement with Nagarjuna to use its brand, network and resources in exchange for a royalty, people familiar with the deal said.
“The deal is such that the assets will now be controlled by Greenko but there is currently no change in Nagarjuna’s shareholding. There is likely to be an agreement between the two parties through which AM Green will use Nagarjuna’s brand, network, resources and people in exchange for a royalty,” said a person familiar with the transaction.
For Acre, the deal is significant since the ARC had consolidated the debt from a seven-bank consortium as recently as March 2023. IDBI Bank, with ₹568 crore of exposure, had managed the sale on behalf of the consortium. Other large lenders include State Bank of India (₹576.91 crore) and ICICI Bank (₹196.70 crore). Bank of India, UCO Bank, Indian Overseas Bank and Punjab National Bank were the other lenders in the consortium.
To be sure, in August last year after Acre had taken over the company’s debt, Nagarjuna had sought shareholders’ approval to sell its urea manufacturing plant and micro irrigation business to AM Green Ammonia (India). That deal, however, did not go through.
“That deal had some pre-set conditions which included resolving energy issues with the government and the promoters bringing in money which could not be met. Going forward, it may be beneficial for AM Green to be merged with Nagarjuna in the future to ensure that the formidable brand, marketing and distribution can be used because otherwise, the transfer of government subsidies will not happen,” said the person cited above.
Emails sent to Nagarjuna and Greenko did not elicit any response till press time.
The most important outcome from Nagarjuna’s point of view is the fact that the company is now debt-free with close to ₹4,000 crore of loans being wiped out.
Source: Economic Times