Varde-Arena, NARCL top contenders for Srei firms | The Financial Express

Varde-Arena, NARCL top contenders for Srei firms

The final date for completion of the CIRP process is scheduled on January 5, 2023. 

Varde-Arena, NARCL top contenders for Srei firms
However, Authum Investment and Infrastructure's financial bid stands as low as Rs4,500 crore, according to sources. 

A consortium of Varde Partners and Arena Investors, and National Asset Reconstruction Company (NARCL) are likely to be the main contenders who could acquire two insolvent Srei companies under the corporate insolvency resolution process.

While the consortium of Varde Partners and Arena Investor has submitted a financial bid of around Rs 13,800 crore for Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL), NARCL has put forward a financial bid of around Rs 13,600 crore. However, Authum Investment and Infrastructure’s financial bid stands as low as Rs4,500 crore, according to sources. 

The sources said the `3500 crore of deferred instruments of NARCL would not be backed by government guarantees, contrary to initial expectations that it would issue government guarantee-backed security receipts. As per its resolution plan, the government-promoted bad bank has committed an upfront cash payment of Rs 2,100 crore and Rs 3,500 payable in deferred instruments. It has further proposed up to Rs 8,000 crore in uncommitted funds on a ‘pay when able’ basis, which could be revised downward based on future recoveries from Srei’s loan assets.

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The consortium of Varde Partners and Arena Investor’s resolution plan includes Rs 2,800 crore in upfront cash, and around Rs 3,600 crore in deferred instruments such as non-convertible and optionally convertible debentures. The plan has also proposed an equity contribution of Rs 1,400 crore as well as an estimated Rs 6,000 crore in uncommitted funds, which would depend on future recoveries from Srei’s loan assets. 

Notably, Srei duo have around Rs 2,500 crore cash in balance sheet from recovery till date.  

According to the sources cited above, Authum Investment’s resolution plan includes an upfront cash component of Rs 2,600 crore and a further Rs 700 crore in secured non-convertible debentures. Additionally, Authum’s plan also proposes to pay the lenders 25% of any upside on any future recoveries for the next five years, which are estimated to be around Rs 1,200 crore. The administrator for the two Srei firms, Rajneesh Sharma, was not available for a comment.  

Notably, three resolution applicants, National Asset Reconstruction Company (NARCL), Authum Investment and Infrastructure, and the consortium of Varde Partners and Arena Investors, submitted resolution plans for the two NBFCs as the deadline for submission of the resolution plans by prospective resolution applicants was December 2. 

Although AM Mining, an affiliate of ArcelorMittal, and Capri Global were the late entrant to the final list of the prospective resolution applicants, they did not submit resolution plans and dropped out of the race for buying out Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL). The final list of the prospective resolution applicants for the two companies consisted of 17 entities. 

Insolvency proceedings against SIFL and its subsidiary SEFL commenced in October 2021 after insolvency petitions filed by the Reserve Bank of India were approved by the Kolkata bench of the National Company Law Tribunal (NCLT). The final date for completion of the CIRP process is scheduled on January 5, 2023. 

The total admitted claims of the financial creditors of the two NBFCs are Rs 32,750.22 crore.  State Bank of India, Punjab and Sind Bank, Axis Bank, HDFC Bank, Union Bank of India, IDBI Bank, UCO Bank and Indian Overseas Bank, among others, are the financial creditors of SIFL and SEFL.

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First published on: 08-12-2022 at 01:05 IST