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Royale Partners' offer for EPC Constructions gets lenders' approval

Dev Chatterjee/Mumbai 12 Jan 19 | 11:19 PM

Lenders have voted to take an offer from Royale Partners, a Dubai-based fund, for EPC Constructions India Ltd (earlier known as Essar Projects India Ltd), which was sent to the National Company Law Tribunal (NCLT) for debt resolution.

A conditional offer by ArcelorMittal was rejected.

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EPC Constructions had defaulted on its loans worth Rs 7,200 crore and has been a non-performing asset since December 2014. The offer by Royale Partners is around Rs 900 crore, including Rs 450 crore upfront cash, said a source close to the development.

About 73 per cent of the lenders agreed to take the offer. EPC Constructions was the second company from the Essar group which was sent for debt resolution by the lenders and in which ArcelorMittal had shown interest.

Arcelor had said it will acquire EPC Constructions only if it wins the race for Essar Steel.

As of now, ArcelorMittal emerged as the highest bidder for Essar Steel with an offer of Rs 42,000 crore but the Ruias have offered to repay all banks and operational creditors. The matter is currently pending in the Ahmedabad Bench of the NCLT.

IDBI Bank was the lead banker to EPC Constructions with an exposure of Rs 1,117 crore, followed by Central Bank of India which had lent Rs 1,054 crore to the company.

Its other lenders included UCO Bank, which gave a loan of Rs 1,011 crore, and Exim Bank, which had an exposure of Rs 884 crore.

Sun Pharma director Sudhir Walia-owned Suraksha Asset Reconstruction Company had an exposure of Rs 642 crore in EPC Constructions.

With this resolution plan, the lenders will be going home with a massive haircut of around 87 per cent.

The company was instrumental in setting up various engineering, procurement and construction projects in India and helped set up many Essar group projects.

The Insolvency and Bankruptcy Code or IBC code has turned out to be a mixed bag for Indian lenders with banks recovering only 50 per cent of their exposure.

Banks, however, will recover a sizeable chunk of their debt in the case of Essar Steel as both ArcelorMittal and the Ruia family have offered to take over a large part of the debt. On January 7, Essar Global Fund Ltd, the holding company of the Essar group, announced that it paid the last tranche of debt worth Rs 12,000 crore to various Indian and foreign lenders.

This was in addition to the Rs 30,000 crore repayment made in August 2017 to various lenders from the proceeds of Essar Oil’s monetisation.

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