NARCL makes ₹10,000crore bid to acquire debt dues of Jaiprakash Associates from banks
The National Asset Reconstruction Company Ltd (NARCL) has placed a bid worth ₹10,000 crore to acquire the debt dues of Jaiprakash Associates (Jaypee) from banks, sources said. The bid was placed in March. Jaiprakash’s debt stands at over ₹29,000 crore.
The NARCL, colloquially called India’s Bad Bank, has reportedly offered to make a mix of upfront payment in cash and remainder through governmentbacked security receipts for buying out the debt. Banks can invoke during the resolution or liquidation of bad loans
According to banking industry sources, counter bids under the Swiss Challenge mechanism will be called for against NARCL’s bid.
“NARCL has placed a binding bid sometime in March. And banks will now invite counter bids under the Swiss Challenge mechanism,” the source said.
businessline reached out to NARCL for comments and the company is yet to respond to queries.
Earlier in December 2023, Finance Minister Nirmala Sitharaman had directed NARCL to further improve its functioning as regards the acquisition of stressed accounts of PSBs. NARCL and banks were told to hold regular meetings to expedite the onboarding of stressed accounts.
The NARCL could make a mix of upfront cash payment and government-backed security receipts for buying out the debt
Post the meeting, NARCL had become active towards onboarding of stressed assets. Till February, the company had onboarded eight stressed accounts s to the tune of ₹58,000 crore.
RESTRUCTURING
Incidentally, in 2017, the Reserve Bank of India (RBI) directed 26 defaulters, including Jaypee, to undergo the bankruptcy process. This led ICICI Bank to initiate an insolvency petition against the company in 2018 before the Allahabad Bench of the National Company Law Tribunal (NCLT).
As per the last available information, Jaypee said that its total borrowing (including interest) was ₹29,361 crore, repayable by 2037. Against this, ₹4,382 crore is overdue as on January 30.
Out of the said borrowing of ₹29,361 crore, another tranche of ₹18,696 crore will get further reduced on transfer to the proposed special purpose vehicle; the scheme of arrangement for this has been duly approved by all the stakeholders, and is pending
NCLT.
“The entire loan is in any case under restructuring,” it said in a recent stock market notification.
Other banks, which have an exposure to Jaypee include SBI, IDBI, Axis Bank, Bank of Maharashtra, Bank of lndia, Canara Bank, Bank of Baroda, Union Bank of lndia, Central Bank of lndia, lndian Overseas Bank, Life lnsurance Corporation of lndia, Punjab National Bank, among others.
On March 30, Jaypee said over 92 per cent of bondholders have given consent for restructuring of foreign currency convertible bonds worth $120 million, which were issued by the company and due for payments in 2020 and 2021. sanction of