MUMBAI: The State Bank of India (SBI) has asked Reliance Industries (RIL) to complete its proposed takeover of bankrupt textile company Alok Industries by paying up its equity share so that the long pending resolution process can be completed, a person directly aware of the communication said.“The letter was written earlier this week, demanding that the company pay Rs 500 crore equity component in its takeover of bankrupt Alok Industries. This deal has already been delayed and RIL’s payment of the equity component will bring it closer to completion,” said this person cited above.The RIL-JM Financial Asset Reconstruction Co consortium won the right to buy Alok Industries in the Insolvency and Bankruptcy Code (IBC) process in March last year. However, RIL which is the senior partner in the consortium, is in talks with banks to fund the majority of the transaction through loans. The company is yet to receive approvals from banks to raise the required money. 73077627 RIL and SBI did not reply to an email seeking comment. Bankers involved in the deal said RIL is in talks with SBI, HDFC Bank and IndusInd Bank to raise money via loans for this deal. SBI has already sanctioned Rs 1,800 crore but HDFC Bank is still considering the proposal. It is unclear whether Indus-Ind has approved any loan.In March 2019, the Ahmedabad bench of the National Company Law Tribunal (NCLT) had approved the sole RIL-JM Financial ARC bid for Alok for Rs 5,050 crore. RIL wants to raise about Rs 4,550 crore through bank loans while infusing Rs 500-crore equity in the company. “SBI wants to make sure that the equity component at least comes in so that they have some surety. If RIL deposits the equity component and does not arrange the rest of the funds, the banks could ask them to forfeit the money, that could be the reason for this letter,” said a second person involved in the deal.In November, the NCLT directed the RIL-JM ARC to complete the transaction “immediately” but did not set a deadline.“RIL says it is waiting for the loans to be sanctioned but we don’t see any urgency from them. We are hoping that they at least deposit their equity component in the interim, which will help us proceed with the paper work for the transaction simultaneously as the loan gets sanctioned,” said the first person cited above.SBI, the lead bank, had initiated insolvency proceedings against Alok Industries in June 2017. It was among the 12 accounts with outstanding loans greater than Rs 5,000 crore that the Reserve Bank of India (RBI) asked banks to refer to the NCLT process. Silvassa-based Alok Industries is a fully integrated textile company with a presence in the cotton and polyester segments. The company owes lenders a total of Rs 30,000 crore, which means banks are taking a collective haircut of 83%.The majority of the Rs 30,000-crore dues are to financial creditors, with the company owing Rs 624 crore to operational creditors.
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