reliance naval: Lenders offer to sell their Reliance Naval loans to NARCL

Lenders to Anil Ambani-promoted Reliance Naval and Engineering (RNEL), having failed to secure the legal nod to a resolution offer for the distressed borrower in more than six months, have proposed selling their loans in the company to the government-backed bad bank, two people aware of the development told ET.

The National Asset Reconstruction Co (NARCL), is in the process of giving a binding offer to the lenders, one of the persons cited above said.

“Considering the judicial delay in getting a plan approved, lenders have approached NARCL to acquire the loans of the shipbuilding company,” said an executive at one of the lenders. “If NARCL acquires it, banks will receive 15% of the consideration upfront.”

NARCL did not respond to ET’s request for comments.

Creditors had voted on a resolution plan jointly submitted by Hazel Mercantile-Swan Energy in March, but the National Company Law Tribunal (NCLT) has not yet endorsed the plan.

More than 95% of the lenders had voted in favour of the Hazel Mercantile-Swan Energy plan, which offered ₹2,040 crore to financial creditors. Of this, ₹1,640 crore were to be paid over the next five years and the remaining after the recoveries made of certain dues, as reported by ET earlier. Jindal Steel and Power, owned by Naveen Jindal, was also in the fray to acquire RNEL.

NARCL’s offer would be a tad higher than the winning bidder’s offer, and it would be under a 15:85 structure wherein NARCL will pay 15% of the consideration upfront, and 85% will be paid in the form of security receipts (SR) to be payable on recovery of loans.

Lenders are seeking to sell the loans to the ARC despite voting on a resolution plan because they fear there could be a series of litigations considering there is an application under Section 29(A) and another application under Section 12(A) pending before the tribunal, an executive at a lender said.

Section 29(A) of the Insolvency and Bankruptcy Code (IBC) prohibits defaulting promoters or their related parties from submitting a resolution plan, while Section 12(A) allows the promoter to offer a settlement that can be implemented provided 90% of the lenders agreed to it and with the approval of the NCLT.