A group of Alok IndustriesBSE 4.88 % employees is making a bid for the assets of the textile company, which is on the block after being referred to the bankruptcy court, two senior officials from the banking circle said.
The employees, who made the surprise move, will likely be competing with Reliance IndustriesBSE -0.29 % (RIL), which too has shown interest in acquiring the textile company either in part or entirely.
State Bank of India, the lead bank in the consortium of lenders to Alok Industries, had referred it to the National Company Law Tribunal in July, following directions from the Reserve Bank of India.
Some employees of the company have jointly submitted a resolution plan for the company to the resolution professional last week, the officials said, speaking on the condition of anonymity.
The company has received claims of ₹29,519 crore from financial creditors and ₹624 crore from operational creditors.
“Employees may not have the capital to support the restructuring of the debt although, and also there are doubts whether they would be able to muster support from lenders given the limited management bandwidth,” said a senior official involved in the resolution. “Reliance Industries, on the other hand, has the capital to turnaround the firm but they will bargain very hard for steep haircuts.”
The resolution professional for Alok Industries has set conditions like a net worth of ₹500 crore and assets of ₹3,000 crore for companies that want to participate in the resolution plan. Further, the candidates should have an ability to invest at least ₹500 crore as equity capital in the company.
Alok Industries has four core divisions — cotton yarn, apparel fabric, home textile and polyester yarn. RIL, which has a petrochemicals business, is interested mainly in the polyester yarn unit.
“All the business is not of interest to Reliance because it would not add synergies, but one or two divisions may be value accretive to it,” a senior bank officials had told ET.
Alok Industries’ lenders had attempted to revive the firm through a strategic debt restructuring scheme. The process allows lenders to convert part of their debt into equity and sell it to a new promoter. But the plan got stuck following an order by the Bombay HC that stayed the sale of assets and any change in the company’s equity structure.
The court issued the order following a petition filed by HSBC on behalf of a few unsecured lenders to settle $55 million (₹353 crore) of arrears. The account was classified as non-performing in the books of the bank in November 2016.
Source: Economic Times