In a fresh twist in the ongoing corporate insolvency resolution process of the Srei group entities, the erstwhile promoters are believed to have submitted a resolution plan to withdraw the companies from insolvency under Section 12A and settle the entire claim of around ₹32,000 crore to the creditors.
According to sources close to Kanorias, the offer, which has been submitted to the administrator, includes ₹3,500 crore upfront cash with NPV (net present value) of ₹7,000 crore. The entire claim of approximately ₹32,000 crore will be repaid using multiple financial instruments such as upfront cash, NCDs, OCDs and equity over a period of time.
Following the completion of the challenge mechanism process, the Srei group entities had received three bids. The State-backed NARCL’s offer was ₹5,555 crore in NPV terms including upfront cash of ₹3,180 crore; Authum Investment and Infrastructure’s bid in NPV terms was for ₹5,526 crore and the consortium of Varde Partners and Arena Investors financial bid in terms of NPV stood at around ₹4,680 crore, including ₹3,250 crore upfront cash amount.
The voting process for the three resolution plans submitted by PRAs for the Srei group entities — Srei Infrastructure Finance and Srei Equipment Finance – began in mid-January and is expected to be completed soon and the voting result is likely to come out by February 15, sources close to the development said.
It is to be noted that under Section 230, the erstwhile promoters of the group had tried making full payment with interest in October 2020 but was rejected and both companies were put in IBC.
“The current offer is different from the ones made earlier in that it offers highest upfront cash component, NPV is also highest and the total debt payment through financial instruments is close to ₹32,452 crore. In addition to settlement of ₹29,000 crore to secured financial creditors, the unsecured financial creditors also to be paid over ₹3,000 crore by way of equity and scheduled redemption,” sources close to Kanorias said.
Voting process
However, sources close to the ongoing resolution process claim that the administrator has not received any letter or resolution plan from the erstwhile promoters.
“If any resolution plan comes, it would be dealt with suitably. The plan should be qualified under Section 12A of the IBC and then the decision will be taken by the CoC,” a source close to development said on conditions of anonymity. The administrator Rajnish Sharma was not immediately available for comments.
However, according to IBC experts, the CoC might not consider the resolution plan submitted by the erstwhile promoters since the Reserve Bank of India had initiated insolvency proceedings against the companies flagging off corporate governance issues.
“When there is negativity and RBI flags it, then none of the lenders are likely to vote in favour even if it makes real business sense,” the IBC expert said.
Justifying the need to submit a resolution plan at this stage of the CRIP process, sources close to Kanorias said that the promoters felt that existing resolution plans under consideration by Srei CoC fail to offer a fair and equitable consideration to both creditors and shareholders of the companies.
“Severe erosion of value has been happening since the company got taken over by the administration. We are trying to restore the company’s value through this payment plan under section 12A of IBC. Many retail investors, both shareholders and bondholders and several borrowers have been approaching the founders, therefore in the interest of all and several, Adisri has presented a proposal for payment of ₹32,500 crore through various structures/instruments, this proposal has been given suo moto based on public information in want of any data/information/details. It has also been informed to the administrator that if data on the business and detailed performance, as made available to offer applicants are given the upfront cash and the offer instruments can be even better,” sources said.