narcl: NARCL’s bid for Meenakshi Energy and Helios Photo triggers Swiss Challenge auction

The government-sponsored National Asset Reconstruction Company of India (NARCL) is expected to acquire the debt of more than half a dozen companies by this month, two people with knowledge of the development said.

Just this week, NARCL offered to acquire two loans – Meenakshi Energy and Helios Photo Voltaic Ltd, makers of solar power equipment – which triggered Swiss Challenge auctions, the sources said.

NARCL, often referred to as a bad bank, offered an anchor bid of Rs 1,003 crore for Meenakshi Energy, which equates to a 28% recovery for lenders. For Helios Photo Voltaic Ltd, formerly known as Moser Baer Photo, the Asset Reconstruction Company (ARC) has offered Rs 35 crore, which equates to a 5% recovery for lenders.

Last month, NARCL picked up the pace of its business after struggling for more than a year to acquire bad debts. She offered to buy back six loans, which sparked a Swiss auction. These include Jaypee Infratech, Mittal Corp, Consolidated Construction Consortium Ltd, SSA International, Meenakshi Energy and Helios Photo Voltaic Ltd.

NARCL did not respond to ET’s request for comment.

Separately, he also made a binding offer of Rs 110 crore for Rainbow Papers on debt of Rs 1,136 crore, which lenders would put up for sale soon, the people quoted above said. Last week, it won Rs 9,234 crore debt from Jaypee Infratech at an undisputed Swiss auction, making it its first acquisition.

In the case of another debt auction – Mittal Corp – lenders said the debt auction was a huge success to improve recovery after NARCL made an anchor bid of Rs 228 crore . It has attracted a counter-offer of Rs 405 crore from Kotak Mahindra bank-backed Phoenix ARC, as ET reported on October 29.

In the case of Meenakshi Energy, NARCL’s Rs 1003 crore bid is for Rs 3619 crore debt held by State Bank of India (SBI), Rural Electrification Corporation, Indian Infrastructure Finance Company, Punjab National Bank (PNB), PTC Financial Services, Bank of India, Union Bank of India, UCO Bank, Punjab & Sind Bank and IDBI Bank. The lenders have appointed BDO India as process advisors and invited expressions of interest (EOI) by November 4. The lenders stipulated that the counter-offer should be at least 6% higher than the main offer.

ARC has offered Rs 35 crore for Helios Photo Voltaic’s Rs 614 crore debt held by SBI, PNB, Canara Bank and Union Bank. PNB Investment Services, the process advisor to the Helios lenders, has stipulated that the counteroffer should be at least 8.5% higher than the anchor offer. The lenders have invited EOIs by November 3 and have scheduled an auction in Switzerland for November 23.

The sale of bad loans to NARCL began following a directive from senior Finance Ministry officials to bank chiefs in a closed-door meeting in mid-September. The meeting was chaired by Financial Services Department Secretary Sanjay Malhotra and attended by SBI Chairman Dinesh Khara, among other bank CEOs, as ET reported on September 19.

In the case of Meenakshi Energy and Helios, NARCL will have the first right to match the counterbid, if any, at the Swiss auction. Both offers are under the 15:85 structure in which 15% of the consideration will be paid upfront, and the balance will be in the form of a security receipt payable upon collection of the loans.

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