UPDATE 2: 6:35 a.m. ET 7/22/2021
: CFM ARC has been announced as the successful bidder for KKR-backed JBF Industries Ltd.’s INR 21.16 billion ($285.9 million) outstanding non-performing loans (NPLs) under the Swiss challenge method initiated by BOB Capital Markets Ltd., a process advisor appointed by a Bank of Baroda-led consortium of lenders, according to two sources with direct knowledge. Continue reading for our Asia Core Credit and EMEA Core Credit teams' reporting on the bidding for JBF Industries Ltd.'s non-performing loans (NPLs), and request a trial for access to reporting and analysis on hundreds more stressed, distressed and performing credits.
There were no competing bids for the NPLs under the Swiss challenge auction, the two sources said.
Reliance Industries is backing an all-cash offer of INR 8.25 billion for the NPLs made by CFM ARC - which was also the anchor bid for JBF Industries NPLs - according to one of the sources and a separate source with knowledge.
CFM ARC will use either the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI) or the National Company Law Tribunal (NCLT) route to settle JBF’s NPLs, the sources said.
If CFM finds that the company has a chance of better recovery as a going concern then it will follow the NCLT process, otherwise, it will go through the SARFAESI route, given the latter route provides for quicker resolutions than the NCLT, one of the sources said.
If there are any competing bids received by CFM for the NPLs, either from the borrower or any other investor, the highest bid would be considered. However, in absence of any competing bids the NPLs will be sold to Reliance, the first and third source explained.
During an auction process of JBF Industries subsidiary, JBF Petrochemicals, sources had cautioned that there were limited strategic investors for the NPLs along with a risk that the potential bidders may get discouraged by the possibility of going up against a Reliance Industries’ bid, as reported.
Reliance Industries did not respond to requests for comment. CFM ARC declined to comment.
UPDATE 1: Lenders Begin INR 21.16B Auction of JBF Industries’ Debt Under Swiss Challenge; Bids Due by July 19
UPDATE 1: 7:10 a.m. ET 7/1/2021
: BOB Capital Markets Ltd., a process advisor appointed by a Bank of Baroda-led consortium of lenders, is auctioning KKR-backed JBF Industries Ltd.’s INR 21.16 billion ($285.9 million) outstanding debt under the Swiss challenge method, according to the bid document
on the process advisor’s website today, July 1.
Bids are to be submitted by 3 p.m. IST on July 19 and bidders have 14 days for due diligence starting today, according to the bid document.
JBF’s lenders have received a binding offer from an interested entity (anchor bidder) - previously reported to be CFM ARC
with an all-cash offer of INR 8.25 billion - for the “acquisition of the facilities availed by the company from the lenders, together with all underlying securities, pledge, guarantees, undertaking, promises issued by the company or any third party in relation to the facilities”, according to the advertisement
released by BOB Capital Markets today.
The bid document reveals the outstanding dues owed to lenders, as below:
The plant-wise capacity of JBF Industries taken from the bid document is below.
Original Story 11:06 p.m. UTC on June 15, 2021
Bank of Baroda-Led Consortium Plans Swiss Challenge Auction for JBF Industries’ INR 25.15B NPLs, Following CFM ARC’s INR 8.25B Bid
A Bank of Baroda-led lender consortium is expected to announce an auction of INR 25.15 billion ($344.5 million) non-performing loans of KKR-backed JBF Industries Ltd. (JBFIL) within a week under the Swiss challenge method, according to two sources with direct knowledge.
The lenders are planning the auction after CFM ARC last month made an all-cash offer of INR 8.25 billion for the NPLs, the sources said. CFM ARC will hold the right of first refusal and can match any offer under the Swiss challenge method, the sources added.
In October 2019, lenders ran a process for implementation of a resolution plan involving a change in management and control of the company along with settlement of the outstanding debt, or settlement of the outstanding debt including by way of assignment, according to a 2019 bid document
, as reported
. However, there were no offers at that time, the sources said.
JBF Industries has polyester film and packaging factories in Ras Al Khaimah (RAK), Belgium, Bahrain and Gujarat, as reported
. JBF RAK is close to signing a restructuring deal with its creditors after four years of negotiations, as reported
. The restructuring involves separating the RAK entity from the Belgian and Bahrain entities and a total of $90 million of working capital facilities, comprising a $50 million, three-year facility A and a $40 million, two-year facility B, as reported.
CFM ARC declined to comment. Bank of Baroda did not respond to requests for comment.