NARCL submits offer for SSA International

18 Oct 2022 , 08:33 AM

The government-sponsored bad bank, National Asset Reconstruction Company Ltd. (NARCL), has offered to buy SSA International Ltd.’s debt from the lenders of the basmati rice exporting company.

This is the fourth business where a Swiss challenge auction is initiated as a result of a NARCL binding offer. Consolidated Construction Consortium Ltd., Mittal Corp., and Jaypee Infratech are the other three businesses.

NARCL has made an Rs31 crore offer under the 15:85 structure on an Rs530 crore main loan that is still unpaid. For lenders, this translates to a six paisa recovery on a rupee principal.

Asset rehabilitation companies are being asked to submit expressions of interest by October 20. An online auction is slated for November 9.

Any counteroffer must have a markup of at least 5% over the anchor offer, according to their requirements. The right to match the counteroffer, if any, belongs to NARCL.

State Bank of India has an Rs368.3 crore exposure to the Rs530 crore in outstanding loans, followed by Canara Bank with Rs118 crore and IDBI with Rs43.4 crore. For corporate insolvency, SSA International has not yet been admitted.

15% of the payment would be paid upfront under the NARCL proposal, and for the remaining amount, NARCL would issue security receipts that would be redeemed as the government-owned ARC collected money from the defaulter. The government has pledged to compensate for any gap in the ARC’s anticipated recovery.

Cash or a combination of cash and SR may be used in challenger bids. The offer agreement specifies that a “first-class bank” must guarantee the SRs. “First-class bank” has not been defined by lenders.

A textile manufacturer operating at a loss, Samtex Fashions Ltd. owns 100% of SSA International. Samtex provided a corporate guarantee worth Rs807.4 crore against secured loans raised by the subsidiary, according to its annual report for FY22. The corporate guarantee of the lenders has been revoked.

The annual report states that SSA International, its directors, and its guarantors (Samtek) have all been labelled as wilful defaulters by IDBI. The factory is not currently engaged in any manufacturing activities.

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