"There was no other bidder so one can now say Ares has won the bid. Banks are still working on internal processes to take approvals to give the go-ahead for the takeover by Acre, and the process will take a few more days," said a person familiar with the exercise.
iStockBankers expect to complete the process this quarter and receive some provisioning writebacks from the account this quarter.
Mumbai: Ares SSG-backed Acre ARC is set to take over the ₹1,500-crore debt of Nagarjuna Fertilizers and Chemicals as banks did not receive any challenging bid for its ₹811-crore offer until the December 31 deadline, people familiar with the process said.
Banks will now take separate approvals from their respective boards before assigning the debt to Acre, these people said.
"There was no other bidder so one can now say Ares has won the bid. Banks are still working on internal processes to take approvals to give the go-ahead for the takeover by Acre, and the process will take a few more days," said a person familiar with the exercise.
To be sure, Acre's offer of ₹811 crore was just above the ₹810 crore reserve price set by banks. But it ensures a 54% recovery for banks.
Acre is backed by its parent Ares SSG, an Asia-Pacific-based alternative asset manager with over $7 billion in assets.
A second person aware of the plan said the majority of the funding for this acquisition is coming from Ares SSG. Typically such large funds purchase debt on behalf of companies who step in to take over the distressed company later. Acre ARC did not reply to an email seeking comment.
The takeover by Acre will be a culmination of the process started by lenders led by IDBI Bank in November which had invited expressions of interest from asset reconstruction companies to take over Nagarjuna's debt of NFC after attempts to initiate an insolvency process against the company were stonewalled by the promoter.
Bankers said delays in the court case and dealing with a difficult promoter tilted the scales in favour of selling the loans to an ARC.
IDBI Bank, with ₹568 crore of exposure, is the lead lender and is managing the sale on behalf of a seven-bank consortium. Other large lenders include the State Bank of India (₹576.91 crore) and ICICI Bank (₹196.70 crore).
Banks received a total of 13 initial bids from prospective buyers but ultimately only one final offer came.
Nagarjuna's 1.59 million tonne plant in Kakinada had faced issues due to a gas pipeline burst in 2014-15. Fertiliser is a heavily regulated sector with significant dependence on government subsidies and delays in such payments also impacted the business.
Bankers expect to complete the process this quarter and receive some provisioning writebacks from the account this quarter.
iStock
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