Government-backed National Asset Reconstruction Company (NARCL) is set to acquire the Rs 1,500 crore debt of Kurukshetra Expressway (KEPL) because no other buyer has offered a better price, said a person familiar with the details. NARCL has offered to buy the “bad loans” of KEPL for Rs 345 crore.
NARCL is also most likely to complete the acquisition of BLA Power’s Rs 738-crore debt, as no company has expressed interest to beat the Rs 285 crore anchor bid from the “bad loan” aggregator.
“Banks are in the process of signing final documents in the KEPL case, while in the case of BLA, too, there was no one who turned up in the Swiss auction. But Friday is the last day for declaration of the successful applicant, which will be announced by the end of business hours,” said a person familiar with the details.
KEPL failed to repay its bank loans after its toll project on the Rohtak-Bawal section of National Highway 71 in Haryana was terminated in July 2021 amid the farmers’ agitation and the disruption caused by the Covid-19 pandemic.
Bank of Baroda (BoB) is the lead lender in the case, accounting for about 40% of the company’s debt, along with its subsidiary Nainital Bank. The total principal due in the account is Rs 527 crore.
NARCL’s offer means banks will be recovering about 23% of their total dues in the account.
In the case of BLA Power, NARCL’s offer means a recovery of about 39% of total dues to lenders led by Indian Bank. The 88 MW coal-based power plant at Gadarwara, Madhya Pradesh, slipped into NPA due to cost overruns and operational issues linked to the availability of coal.
BoB Capital Markets was the process advisor for lenders in both cases. BoB Capital Markets and NARCL did not respond to emails seeking comments.
NARC’s bid is in an 85:15 structure, where 15% is paid in cash, and the remaining 85% is paid in security receipts, which are backed by a government guarantee, giving the so-called “bad bank” an advantage over other asset reconstruction companies (ARCs) in bids.
Lenders can invoke the government guarantee to make good any shortfall between the amount realised from the sale of the underlying assets and the face value of security receipts issued for that asset. The guarantee is valid for five years.
Source: Economic Times