The Malpani Group has tied up with Varda Capital-backed Aditya Birla Asset Reconstruction Company to jointly acquire the distressed loans of Manmohan Shetty-promoted Imagicaaworld Entertainment Ltd, in a deal which would result in a recovery of Rs 575 crore for lenders, said two people aware about the development.
The Malpani Group has offered to acquire Imagicaaworld under an out-of-court settlement reached between banks and the company after three years of negotiations. Under the proposed structure, Imagicaaworld will make a preferential allotment of shares worth Rs 500 crore to the Malpani Group, giving it a 70% stake in the distressed theme-park operator.
As the largest shareholder, the Malpani Group then would offer Rs 500 crore as a one-time settlement to Imagicaaworld’s lenders, the people said. After the deal, lenders would be allotted a 13% equity stake, valued at Rs 75 crore, in the company. The settlement offer of Rs 575 crore equates to a recovery of 40% for lenders.
The Malpani Group and Aditya Birla ARC did not respond to ET’s request for comment till press time Tuesday.
Despite a haircut by lenders, Bollywood film producer Manmohan Shetty will hold 5% of Imagicaaworld. At present, Shetty through affiliate companies holds a 31.08% stake in the listed company.
Imagicaaworld, earlier known as Adlabs Entertainment, had total debt of Rs 1,417 crore as of March 31, 2021. In 2019, Union Bank of India had rejected promoter Shetty’s Rs 575 crore one-time settlement offer on expectations of higher bids, as reported earlier.
The transaction is expected to close in the June quarter, since lenders have yet to take board approval and then hold a Swiss auction inviting counteroffers, one of the lenders said.
Imagicaaworld owns and operates a theme park and a water park under the Imagica brand and a hotel under the Novotel Imagicaa brand. The theme park is located at Khopoli, off the Mumbai-Pune Express Highway, and is spread over 130 acres, including 30 acres of unutilised land, with another surplus land area of 203 acres.
Union Bank of India, which is the lead bank, has the highest outstanding loan of Rs 429 crore to the company, followed by Bank of Baroda at Rs 320 crore. Other lenders are Canara Bank, Bank of India, Central Bank of India, J&K Bank, Indian Overseas Bank, Life Insurance Corporation and Assets Care & Reconstruction Company, an ARC backed by Ares SSG Capital.