Union Bank puts KSK Mahanadi's Rs2,077 crore loan on auction

24 Aug 2022 , 10:08 AM

According to an auction notification, Union Bank of India (UBI), KSK Mahanadi’s second largest creditor, has put its Rs2,077 crore overdue debt on the market.

Other lenders, including State Bank of India, Punjab National Bank, Bank of Baroda (BoB), and Axis Bank, have already liquidated their debts in the debt-laden company operating a 3,600 MW power plant.

UBI has set a cash reserve price of Rs919 crore for its exposure. It will recoup 44% of the outstanding amount at this price (a 56% decrease).

The deadline for expressions of interest from buyers is August 31, followed by an electronic auction on September 1.

So far, the company has admitted claims of Rs29,501 crore from lenders.

“Because there has been no movement in the recovery through the National Company Law Tribunal (NCLT) for several months, the bank has placed the debt up for sale. So, rather than waiting for a recovery, it is best to accept the cash on offer “a source acquainted with the procedure stated.

Aditya Birla ARC currently holds 34% of the company’s debt after purchasing loans from Axis Bank, BoB, and PNB during the previous two years.

With nearly 10% of UBI’s debt, the ARC may claim 44% of the company’s debt, giving it a veto over any debt resolution. The ARC is anticipated to make a bid for UBI’s debt.

Banks are selling their debt at KSK Mahanadi after nearly three years of futile attempts to initiate an insolvency procedure for the firm.

KSK Mahanadi is a subsidiary of the indebted Hyderabad-based KSK Energy Ventures. According to its website, the firm was admitted to bankruptcy court in October 2019 following a complaint brought by Power Finance Corp, to whom it owes Rs3,300 crore.

At around 10.13 AM, Union Bank of India was trading at Rs40.45 up by 2.15% from its previous closing of Rs39.60 on the BSE.