Srei lenders to start voting on resolution plans from Monday

Mumbai: Lenders to the Srei group companies will start voting from Monday on the resolution plans submitted by government-owned National Asset Reconstruction Company (NARCL), Authum Investment and the Arena Investors-Varde Partners team, people aware of the development told ET.

Most Srei lenders, including State Bank of India, will prefer to vote for the government-promoted bad bank since it has given the highest offer of ₹5,555 crore, the people said. Authum has offered ₹5,526 crore while Arena-Varde team offered ₹4,680 crore. All offers are on a net present value basis (NPV), arrived at by discounting future cash flows.

The voting for Srei Infrastructure Finance and Srei Equipment Finance, which are undergoing insolvency proceedings, will end on January 31, the people said. The administrator, Rajnish Sharma, will seek the tribunal's approval for the plan that receives the highest vote.

If NARCL receives the highest offer, it would be the first acquisition of an insolvent company by the government-owned asset reconstruction company (ARC) under the Insolvency and Bankruptcy Code. In October, the central bank allowed ARCs with ₹1,000 crore in net-owned funds to bid for companies under the IBC, which made NARCL an eligible bidder. Prior to this, ARCs were not allowed to give plans under the bankruptcy law.

NARCL was identified as the highest bidder at an auction held on January 3.

It offered a total payment of ₹12,600 crore (with an NPV of ₹5,555 crore). Of this, ₹3,200 crore is upfront payment and the remaining is staggered in the form of debentures. These debentures are not guaranteed by the government, unlike other distressed loans acquired by NARCL.

The administrator has admitted ₹32,750 crore in claims from verified creditors. The offer by NARCL will equate to a recovery of 17% on an NPV basis.

In the first round, after the auction was restarted, Authum submitted the highest offer, followed by the Arena-Varde team and NARCL. In the next bidding process, which was in the form of a challenge auction, Arena-Varde exited the fray after the second round of bidding. Lenders, though, will have the option to vote for all three plans.