Welspun acquires 54% of Sintex BAPL debt

Welspun Corp has taken over more than half of the debt of KKR-backed Sintex BAPL, paving the way for it to acquire the company that has been undergoing insolvency proceedings for over a year, said two people aware of the development.

Welspun is offering Rs 1,127 crore to acquire Sintex BAPL, a manufacturer of plastic components for the automotive industry. This would equate to a recovery of about 36% for lenders on their outstanding principal of Rs 3,168 crore, one of the people said.

Welspun is seeking to acquire at least 67% of the total debt, which will give it controlling rights at Sintex BAPL’s committee of creditors. A resolution can be approved only if 66% of lenders by value of debt agree on it.

So far, it has acquired 54%, or Rs 1,737 crore, of the principal debt for Rs 546 crore, by purchasing loans from three banks and bonds in the secondary market, said the second person.

Rajeev Gupta and Raj Kataria-founded Arpwood Capital, too, was in talks with lenders to acquire the company, but the negotiations did not progress after Welspun increased its offer, a third person said. Last December, Arpwood had offered Rs 1,100 crore to lenders against Welspun’s offer of Rs 1,076 crore, as reported by ET. Welspun then sweetened its offer to Rs 1,127 crore.

Welspun did not respond to a request for comment.

Mahatva Plastic Products & Building Materials Pvt Ltd, a wholly owned subsidiary of Welspun, purchased Rs 1,176 crore of bonds from the secondary market in April. Asset Reconstruction Company (India) Ltd (Arcil), backed by Welspun, acquired another about Rs 561 crore of unsecured loan from RBL Bank, Axis Bank and Deutsche Bank last month.

Welspun is in talks with Bank of Baroda and State Bank of India to acquire their Rs 134 crore and Rs 244 crore loans, respectively, said the first person.

Arcil purchased Axis Bank’s Rs 218.4 crore unsecured loan for Rs 63 crore, RBL Bank’s Rs 280 crore unsecured loan for Rs 65 crore and Deutsche Bank’s Rs 62 crore loan for Rs 14 crore, the person said.

Axis Bank and RBL Bank did not respond to requests for comment, while DB declined to comment.

Sintex BAPL was admitted for insolvency proceedings in December 2020 on a petition by a trade creditor. It is a subsidiary of Sintex Plastics Technology and was demerged from Sintex Industries, which is separately undergoing bankruptcy proceedings. Lenders of Sintex Industries have voted for a resolution plan submitted by Reliance Industries. Welspun has bid for Sintex Prefab & Infra Ltd, which is also undergoing insolvency proceedings.