State-run Punjab & Sind Bank has taken the first steps to recover bad loans through a sale in secondary markets and joined other lenders like State Bank of India and Bank of India as it puts on the block loans of KSK Mahanadi and KSK Water Infrastructure.
The lender is looking to recover over 50% from the sale.
The bank has invited bids for a loan of ₹110 crore for KSK Mahanadi and ₹45 crore for KSK Water Infrastructure, setting a reserve price of ₹ 60 crore and ₹ 23 crore, respectively, on an all-cash basis.
Interested buyers have until August 25 to submit expressions of interest (EOIs) and until September 11 to submit binding bids, as mentioned in a website notice.
The decision to sell debt from KSK Mahanadi Power comes as the in-court resolution process is delayed for more than two years. The company’s total admitted claims stand at ₹32,410 crore.
Recently, the Hyderabad bench of the NCLT extended the timeline for receiving EOIs for KSK Water from the Consortium of PFC, REC, and NTPC for two months from the date of the order issued on June 8, 2023.
For KSK Mahanadi, prospective resolution applicants such as Adani Power, Jindal Steel and Power and Vedanta have shown interest in the power plant. However, the dates for submission of firm bids have been extended several times and they still have a couple of months to submit bids, a source said.
Recently, Union Bank of India sold KSK Mahanadi debt of ₹2,077 crore to ASREC ARC for ₹828 crore in February. which resulted in a 40% recovery on outstanding loans.
Also, the Life Insurance Corporation of India sold ₹613 crore of KSK Mahanadi loans to Rare ARC for ₹188 crore. State Bank of India’s sale of ₹3,815 crore to Aditya Birla ARC last year was the largest sale of debt of the distressed thermal power plant.
KSK Mahanadi Power currently operates a 1,800 MW coal-based power project in Chhattisgarh, holding long-term Power Purchase Agreements for 1,582 MW with guaranteed fuel supply. The company has been facing bankruptcy proceedings since October 2019 when Power Finance Corporation filed a petition under the Insolvency and Bankruptcy Code.
