NCLT approves JNPT’s resolution plan to purchase Dighi Port for ₹853 crore

P Manoj MUMBAI | Updated on May 20, 2019 Published on May 20, 2019

The acquisition of Dighi port was part of the strategy of India’s busiest container port to develop a hub and spoke model with JNPT at the centre   -  SHASHI ASHIWAL / BL

Deal marks the first purchase of a private firm by a govt-owned firm under IBC

Jawaharlal Nehru Port Trust (JNPT) has won approval from the  National Company Law Tribunal (NCLT)  to buy debt-laden Dighi Port Ltd for ₹853.3 crore in one of the cheapest deals in the port sector.

On May 8, the Mumbai Bench of the NCLT approved the resolution plan submitted by JNPT, India’s biggest container port,  for Dighi Port, marking the first instance of a government-owned company. acquiring a private firm under the Insolvency and Bankruptcy Code (IBC).

Adani bid

JNPT had to stave  off a strong challenge from Adani Ports and Special Economic Zone Ltd (APSEZ) to win the deal. APSEZ, India’s biggest private port operator, had quoted ₹1 crore more than JNPT in its resolution plan.

APSEZ told the NCLT that the non-submission of performance bank guarantee of ₹100 crore by JNPT would render its plan “non-responsive”, and that Dighi’s Committee of Creditors (CoC) had the right to reject the plan. Such a performance bank guarantee has to be submitted within five days of the plan been approved by the CoC.

“The non-submission of performance bank guarantee by JNPT, which is a Government of India undertaking, will not render the CoC decision a nullity since JNPT has ‘sovereign guarantee’, which is at a  higher footing than bank guarantee and there is no reason to question the solvency of a Government of India undertaking,” the NCLT said.

JNPT’s resolution plan

JNPT will pay ₹651.1 crore to a clutch of 18 financial creditors, a 72.2 per cent haircut to the ₹3,074.5 crore that Dighi owes them. It  will invest a further ₹190.8 crore as equity to improve the operations of Dighi port and also pay ₹11.4 crore to Maharashtra Maritime Board.

Dighi is located in the same district as JNPT, just a few kilometres away, and is planned to be developed as a satellite port.

According to JNPT, its resolution plan offers  more than 85 per cent of the average liquidation value of ₹356.3 crore and is also higher than the average fair value of ₹656.1 crore worked out by two registered valuers. It is also a rare resolution plan wherein the plan outlay is more than the fair value.

The plan was referred to the NCLT after it was cleared by the CoC, led by Bank of India, on February 1. A day earlier, the CoC had rejected the resolution plan submitted by APSEZ, which  termed the  decision “wrongful and illegal”.

JNPT proposes to fund the resolution plan from its internal resources  and shareholders’ funds.

The operational creditors will be paid 10 per cent of their admitted outstanding claim. The total amount claimed by the operational creditors was ₹216.4 crore, out of which ₹5.9 crore has been admitted and ₹142.7 crore was still under verification as on November 20, 2018.

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Published on May 20, 2019
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