NARCL is also very likely to complete the ₹738-million loan acquisition of BLA Power, as no company has shown interest in beating the ₹285-million anchor bid from the “bad debt” collector.
“Banks are in the process of signing the final documents in the case of KEPL, while in the case of BLA, no one was in the Swiss auction.
KEPL has failed to repay its bank loans after the toll project on the Rohtak-Baul section of National Highway 71 in Haryana was completed in July 2021 amid chaos caused by farmers’ protests and the Covid-19 outbreak.
Bank of Baroda (BoB) is the lead lender in the case, accounting for around 40% of the company’s debt, along with its subsidiary Nainital Bank. The total principal payment on account is ₹ 527 crore.
NARCL’s proposal means that banks will recover around 23% of their total disbursements on account.
In BLA Power’s case, NARCL’s proposal meant repayment of around 39% of total loans to Indian bank-led lenders. An 88 MW coal-based power plant in Madhya Pradesh fell into NPA due to cost overruns and operational issues related to coal availability. BoB Capital Markets was process counsel for the borrowers in both cases. BoB Capital Markets and NARCL did not respond to emails seeking comments.
NARC’s bid is in an 85:15 structure, where 15% is paid in cash, and the remaining 85% is paid in security receipts, which are backed by a government guarantee, which the so-called “bad bank” leverages in bidding for other asset reconstruction companies (ARCs).
Creditors can request a government guarantee to make up the difference between the amount received from the sale of the underlying asset and the face value of the security receipts issued for the asset. The warranty is valid for five years.
