MUMBAI: State Bank of India (SBI) failed to attract investors at an auction held on Thursday to sell Rs 1,703 crore debt of Hindusthan National Glass & Industries (HNGIL), the country’s largest glass bottle maker, whose debt resolution has been delayed by more than a year due to the litigation between the two bidders in the fray.
The bank had set a Rs 821 crore reserve price on the HNGIL debt, implying a 48% recovery on the total outstanding amount.
Nearly half a dozen asset reconstruction companies (ARCs), including Edelweiss ARC and Phoenix ARC, submitted expressions of interest, as reported by ET on February 4.
But none of them submitted a bid at the auction held on Thursday, said people with knowledge of the matter.
The bid-ask range between the ARCs and the bank was very wide, a senior executive from an ARC said, explaining the rationale for not participating in the auction.
SBI did not respond to ET’s request for comments.
Kolkata-based HNG received resolution plans from AGI Greenpac and Madhvani Group. In October 2022, 98% of lenders voted on a Rs 2,213 crore plan by AGI Greenpac. The Madhvani Group entity, Independent Sugar Corporation (INSCO), received 88% of votes.
Girish Juneja, the EY-backed resolution professional, admitted claims of rs 3,785 crore, of which Rs 3,335 crore was from secured financial creditors. AGI Greenpac offered Rs 2,207 crore to secured financial creditors, equating to a recovery of 66%. However, AGI Greenpac’s Rs 2,207 crore offer included ‘350 crore deferred payment to lenders.
A back-of-the-envelope calculation showed that SBI, with a 38.2% share in debt, would recover about Rs 843 crore under the corporate insolvency resolution process, of which ‘688 crore would be upfront and the remaining would be deferred over three years.
However, to acquire SBI’s debt, an ARC must pay a minimum reserve price of Rs 821 crore upfront, while it would recover Rs 688 crore upfront 90 days after the National Company Law Tribunal (NCLT) approves it and then wait for three years to receive the deferred payment. In addition, there is no clarity on how long it would take for NCLT to approve the plan.
SBI hoped to recover ‘821 crore, which would have helped it report better recovery numbers for the fourth quarter of this fiscal.
Madhvani Group had disputed in the NCLT the decision of the Competition Commission of India to approve AGI Greenpac’s acquisition of HNGIL, which was upheld by the appellate tribunal.
