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    Future, Srei Cos among 17 accounts in NARCL's buy list

    Synopsis

    The largest account on the list is Srei Equipment Finance with an outstanding loan of Rs 22,485 crore. The list also includes Srei Infrastructure Finance (Rs 10,330 crore outstanding), Future Retail (Rs 10,700 crore), Future Entertainment (Rs 5,800 crore), Future Lifestyles Fashions (Rs 1,781 crore), Future Supply Chain Solutions (Rs310 crore), and Future Consumers (Rs 281 crore).

    houseAgencies
    Govt-backed bad bank Large Value Accounts sounds out lenders for over `93,000-cr debt under 15:85 structure
    The government-promoted National Asset Reconstruction Company (NARCL) has offered to acquire 17 distressed companies, including five Future group companies and two Srei accounts, from lenders, two people aware of the development said.

    The ARC a week ago circulated a list among lenders of 17 companies with total outstanding loans of ₹93,240 crore.

    ET reviewed a copy of the list. NARCL could not be reached for comments.

    NARCL has prepared a fresh list in an effort to revive the ARC, the formation of which was announced in union budget 2021 but has failed to acquire a single loan yet. "Most of the cases from the earlier list were nearly resolved," one of the persons cited above said.

    The largest account on the list is Srei Equipment Finance with an outstanding loan of Rs 22,485 crore. The list also includes Srei Infrastructure Finance (Rs 10,330 crore outstanding), Future Retail (Rs 10,700 crore), Future Entertainment (Rs 5,800 crore), Future Lifestyles Fashions (Rs 1,781 crore), Future Supply Chain Solutions (Rs310 crore), and Future Consumers (Rs 281 crore).
    Future, Srei Cos Among 17 Accounts in NARCL’s Buy List

    Lenders are awaiting NCLT's order to admit Future Retail for insolvency proceedings. In the case of the other four Future companies, promoter Kishore Biyani is in talks with lenders for an out-of-court resolution.

    The two Srei companies are undergoing insolvency proceedings.

    Jaiprakash Associates is the second largest account listed, with outstanding loans of Rs 20,167 crore. Its affiliate, Jaypee Cement, with Rs 527 crore loan, is also listed. Lenders are in talks with promoter Manoj Gaur, seeking out-of-court resolution for both these accounts, people cited above said.

    Other accounts in the list include three EPC (engineering, procurement and construction) companies - SPML Infra (Rs 2,972 crore), MBL Infrastructure (Rs 1,642 crore) and Soma Enterprises (Rs 4,492 crore). The remaining companies include Bajaj Hindusthan Sugars, Simbhaoli Sugars, Shakti Bhog Foods, P C Jeweller Ltd and Panipat Jalandhar NH-1 Tollways.

    As per the proposal, NARCL would acquire the assets under 15:85 structure wherein 15% of the consideration would be paid upfront and the remaining 85% would be in the form of security receipt (SR). NARCL would redeem 85% of SRs issued to banks since it is backed by a government guarantee. To clean up books of the state-owned banks, government promoted NARCL wherein it provided Rs 30,600 crore guarantee for any shortfall in recovery.

    A government guarantee on redemption of SRs is one of the biggest attractions for banks to sell loans to NARCL under the 15:85 structure. In most other transactions, banks have resisted payment in the form of SRs and chosen to sell the loan only if the price of transaction value is made up front.

    NARCL would buy an account only if at least 75% or more lenders by value agree to sell so that it can drive the resolution process. This is primarily because in case of an out-of-court resolution under the Reserve Bank of India’s framework requires upto 75% of lenders to sign the inter-creditor agreement to approve a debt recast plan. But, under the Insolvency and Bankruptcy Code (IBC), at least 66% of lenders by value must agree to pass a resolution.

    Mittal Corp, Lavasa, Jaypee Infratech and Amtek Auto are some of the accounts in NARCL's first list wherein lenders have voted on the plan and are awaiting approval from bankruptcy court. Some of the remaining accounts are complex such as VOVL, GTL, and Reliance Naval and Engineering, the sources said.

    NARCL had given lead bank Indian Overseas Bank an offer to acquire Rainbow Papers, among 22 companies from the first list, but the talks between the two have not progressed.


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