NARCL: Promoter betters NARCL’s full-cash offer for CCCL


Mumbai: National Asset Reconstruction Co (NARCL)’s full-cash offer for (CCCL) is facing a stiff challenge from the promoter who has in an application offered to settle dues under Section 12A of the Insolvency and Bankruptcy Code (IBC).

In his application to the National Company Law Tribunal (NCLT), CCCL promoter R Sarabeswar has offered to pay ₹167 crore in cash and also promised to pay another ₹165 crore to make up for any invoked government guarantees and money received from arbitration claims from the government in the future.

The promoter’s total offer of ₹332 crore is a 13% recovery for lenders and, more importantly, much higher than the ₹130 crore cash offered by NARCL. “The promoter’s offer is two-three months old but it was never taken seriously. But earlier this month he deposited ₹27 crore in an

escrow account to make his intentions clear. The NCLT has now asked banks for their views on this offer. Given the big gap in what he has offered and what the NARCL offer is, some banks are inclined to take this offer,” said a person familiar with the developments.

The CCCL promoter has offered upfront cash of ₹167 crore. He has also offered to make good any invocation of bank guarantee up to ₹80 crore and agreed to pay banks from the proceeds of any arbitration from the government up to ₹85 crore.

A group of four lenders led by

() and also including (BoB), and Bank are creditors to CCCL. IBC rules say such settlement offers by promoters require 90% of lenders by value of debt to vote in favour of the plan.

Spokespersons for SBI, IDBI and BoB did not reply to emails seeking comment till press time.

CCCL could not be immediately reached for comment.IDBI Bank and BoB make about 40% of the vote, making their consent necessary for any plan to be approved. Together with SBI, the three banks make close to 90% of the vote. Some bankers are sceptical about a promoter-backed plan because of the delays it had faced earlier, especially due to the long-drawn court process.

“The NARCL was brought into the picture to ensure quick resolution for banks. In this case, the promoter is proposing a settlement by bringing in new investors but there is still a lack of clarity on who these investors are. Also, the timeline for the settlement cannot be maintained because it is an NCLT-monitored process. So there are still questions on this offer,” said a second person aware of the developments.

To take over CCCL, NARCL had to make a full cash offer, for the first time veering away from the security receipts (SRs) route in order to match Gujarat-based NBFC Raj Radhe Finance’s ₹130 crore bid. Raj Radhe itself had challenged NARCL’s ₹100 crore offer to take over the ₹2,623 crore outstanding dues of the company.

The current bid by NARCL amounts to a 5% recovery for lenders on total outstanding dues of ₹2,623 crore. Lenders will now meet to take into consideration the promoter’s offer and convey their decision to the NCLT.



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