The National Asset Reconstruction Company of India (NARCL) has given a binding offer to lenders to acquire ₹988-crore debt of a road project awarded to Subhash Chandra’s Essel Infraprojects in Ludhiana, said people with knowledge of the matter.
The government-backed asset reconstruction company has offered to acquire debt Ludhiana Talwandi Toll Road (LTTRPL), which is mandated to build a 78-kilometre four-lane stretch of the National Highway-95 between Ludhiana and Talwandi Bhai in Ferozepur district via Moga in Punjab.
NARCL offered ₹270 crore against the ₹988 crore debt, equating to a 27% recovery for lenders.
Lenders have invited counteroffers from other ARCs, according to a notice issued by process advisor, BoB Caps. The notice does not name NARCL as the anchor bidder.
Lenders have proposed to hold a Swiss challenge auction on April 19, wherein NARCL will have the first right to match a counteroffer.
The company’s total debt to lenders is ₹988 crore, of which the principal debt is ₹543 crore. Punjab National Bank has a debt hold of ₹264 crore, Indian Overseas Bank at ₹210 crore, and Central Bank of India at ₹118 crore. Other lenders are Bank of Baroda, India Infrastructure Finance Company (IIFCL) and Canara Bank.
LTTRPL is a 74:26 joint venture between Essel Infraprojects and Pan India Network. In 2011, the National Highways Authority of India awarded LTTRPL the four-lane project on NH-95 with a mandate to complete the project by September 2014. NHAI signed a concession agreement for 29 years from the appointed date of March 26, 2012.
NARCL’s offer is under a 15:85 structure wherein 15% of the consideration is cash, and the rest as security receipts payable on recovery.
IIFCL, which holds senior debt of ₹69 crore and junior debt of ₹149 crore, has filed an application before Delhi’s Debts Recovery Tribunal for recovery of ₹174 crore under the guarantee reportedly given by Essel Infraprojects on behalf of LTTRPL, according to disclosures made by Zee Entertainment Enterprises to the stock exchanges.
According to a report by Care Ratings, “There have been delays in the completion of the project due to a combination of factors viz. change in EPC contractors and delays in obtaining requisite clearances from various authorities. According to a media report, most of the pending work is on the stretch between Moga and Talwandi Bhai.”