Deadline extended for approval of resolution plans of Srei Equipment Finance, Srei Infrastructure Finance

14 Oct 2022 , 10:30 AM

The deadline for approving resolution proposals for two Srei Group troubled infrastructure financiers has been extended by a month to November 15. This is in response to demands from Prudent ARC, Edelweiss Alternative Asset Advisors, and AM Mining India, which is supported by ArcelorMittal, sources informed ET.

Administrator Rajnish Sharma had set a deadline of October 15 for accepting resolution options after lenders reopened the selling process of Srei Equipment Finance and Srei Infrastructure Finance.

The three prospective bidders whom each submitted separate expressions of interest requested additional time to complete their due diligence.

ArcelorMittal’s unexpected interest in the twin Srei entities last month is related to its ongoing conflict with Srei Infrastructure Finance regarding the construction of the Odisha Slurry Pipeline (OSPIL).

Under the Insolvency and Bankruptcy Code (IBC), the 253-km pipeline transports raw materials to the Essar Steel pellet facility, which ArcelorMittal Nippon Steel India has since bought.

Objecting to the distribution of the sale profits of OSPIL and alleging discrimination against the same class of creditors, Srei Infrastructure Finance filed a petition with the Supreme Court against Arcelor Mittal.

Since the central bank this week permitted asset reconstruction companies with Rs1,000 crore in net owned funds to compete for enterprises facing insolvency, Edelweiss is also taking into consideration making a bid for Srei.

 According to the report, Edelweiss Fund may submit a strategy in collaboration with Edelweiss ARC since the latter has a NOF of more than Rs1,000 crore.

After the parameters of the request for proposal (RFP) were changed, lenders resumed the sale process of the financiers with headquarters in Kolkata. Earnest money deposits (EMD) were decreased by lenders from Rs150 crore to Rs50 crore, and the performance bank guarantee was dropped from Rs500 crore to a minimum of Rs300 crore.

According to the amended RFP, if the Reserve Bank of India (RBI) does not approve the winning bidder, the Rs50 crore EMD will be forfeited.

The RFP was changed to resolve a dispute between lenders and the joint bidder, Arena Investors in collaboration with Varde Partners, about the submission of an unconditional EMD. The two had provided conditional EMDs, which lenders did not accept.

A year ago, the twin Srei firms started the corporate insolvency process. Verified claims totalling Rs32,750 crore have been submitted to the resolution specialist.

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