Govt bad bank plans to buy 12 stressed companies by month-end

The government-promoted National Asset Reconstruction Company of India (NARCL) is set to acquire the debt of over half a dozen companies by this month, said two people aware of the development.

This week itself the NARCL has offered to acquire two loans -Meenakshi Energy and Helios Photo Voltaic Ltd, makers of solar energy equipment - which has triggered Swiss Challenge auctions, the people said.

NARCL, often referred to as a bad bank, has offered Rs 1003 crore anchor offer for Meenakshi Energy which equates to a recovery of 28% for lenders. For Helios Photo Voltaic Ltd, earlier known as Moser Baer Photo, the asset reconstruction company (ARC) has offered Rs 35 crore, equating to a recovery of 5% for lenders.

Last month NARCL accelerated the pace of its activities after struggling for over a year to acquire bad loans. It has offered to buy six loans which has triggered Swiss auctions. These include , Mittal Corp, , SSA International, Meenakshi Energy and Helios Photo Voltaic Ltd. In all, it plans to acquire 18 accounts this quarter totalling ₹39,921 crore debt, one of the persons cited above said.
NARCL did not respond to ET’s request for comments.

Separately it has also given a binding offer of Rs 110 crore for Rainbow Papers on Rs 1136 crore debt, which lenders would put on the block soon, the people cited above said. Last week, it won Rs 9234 crore debt of Jaypee Infratech at an uncontested Swiss auction– marking it as its first acquisition.

In the case of another debt sale- Mittal Corp- lenders said the debt auction was hugely successful in improving recovery after NARCL gave an anchor offer of Rs 228 crore. It attracted a counterbid of Rs 405 crore from Bank-backed Phoenix ARC, as reported by ET on October 29.

In the case of Meenakshi Energy, NARCL’s Rs 1003 crore offer is on Rs 3619 crore debt held by (SBI), , Indian , (PNB), , Bank of India, , , Punjab & and . Lenders have appointed BDO India as process advisors and invited expressions of interest (EOI) by November 4. Lenders have stipulated that the counteroffer should be at least 6% higher than the anchor offer.

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

The sale of bad loans to NARCL kicked off following a directive by senior finance ministry officials to bank chiefs at a closed-door meeting held in mid-September. The meeting was chaired by Sanjay Malhotra, secretary of the department of financial services, and attended by Dinesh Khara, chairman of SBI, among other bank CEOs, as reported by ET on September 19.

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