“The offer from NARCL came last week and is being distributed among all lenders. Banks had already taken action settlement “The company pulled out in January last year, but the promoter has also filed an interim application to offer a settlement,” said a person familiar with the transaction. “There is still no clarity on how the promoters will arrange funding and payment terms.”
The company was promoted by former Rajya Sabha MP T Subbarami Reddy and his family. The liquidation value of the company is not yet known, but typically EPC companies, with low asset holdings on their own books, do not command high liquidation valuations.
The promoter’s offer under Section 12A of the Insolvency and Bankruptcy Code (IBC) includes an undertaking to compensate any loss that creditors may suffer due to invocation of bank guarantees (BGs).
Banks are looking for a quick repayment schedule from the developer with an upfront cash payment within 90 days, not the 180 days they offer.
“Moreover, the promoters have offered to deal with the BGs only after the NCLT gives its nod. The banks would want this to be sorted out after the banks give their approval and not after the NCLT gives its nod. NCLT “The NARCL offer also includes some advantages for the banks in case there are some claims that are formally admitted later. “Banks are weighing both options. Now that the NARCL offer is out, banks may take a better decision because they would prefer to deal with a clean offer rather than getting entangled with the problems of the promoters,” said the first person cited above.
NARCL did not respond to an email requesting comment.
To be sure, the Rs 750 crore offer by the promoters, even in the best-case scenario, means a recovery of just 8% for the creditors. Of the total debts, around Rs 2,775 crore are tied to guarantees given by the company. These include guarantees for distressed projects being executed by Gayatri – Indore Dewas Tollways and its subsidiary Sai Maatarini Tollways. But these represent a minor portion of the bank debt.
Both projects have been cancelled by the National Highways Authority of India (NHAI) and arbitration claims are pending.
Canara Bank is the largest creditor with 23% of the total debts totaling Rs 1,911 crore, followed by Bank of Baroda with 15% to Rs 1,382 crore.
The lenders filed for NCLT’s liquidation in January, rejecting the sole offer from private equity firm Mark AB Capital Investment LLC offering Rs 650 crore, of which only Rs 50 crore was cash upfront.
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