UPDATE 1: 7:31 a.m. ET 5/11/2023: National Asset Reconstruction Company Ltd., or NARCL, is the anchor bidder that has triggered the Swiss challenged auction for the INR 3.98 billion ($48.57 million) stressed loan exposures of State Bank of India or SBI and Punjab National Bank or PNB in Parenteral Drugs (India) Ltd., said two sources close to the matter.
NARCL’s INR 450 million bid through the 15:85 cash-cum-security receipt structure has been set as the reserve price for the auction process, the sources said.
Parenteral Drugs is undergoing a corporate insolvency resolution process or CIRP under the Insolvency and Bankruptcy Code or IBC, as
reported.
SBI’s principal outstanding exposure in the company as of March 31 stands at INR 3.18 billion, while PNB’s principal outstanding stands at INR 804.7 million, according to the auction notice.
SBI has submitted claims worth INR 8.79 billion and PNB has submitted claims worth INR 2.93 billion, the auction notice states. The admitted claims include interest and penalty on the principal outstanding, the sources said.
NARCL, SBI, and PNB did not respond to requests for comment.
Original Story 5:09 a.m. UTC on May 11, 2023SBI, PNB Announce e-auction of INR 3.98 billion Parenteral Drugs Stressed Loan Exposure Under Swiss Challenge Method; SBI Announces e-auction of Outstanding Stressed Loans in Kasturi Ceramics, Tara CotginRelevant Documents:Loan Auction dated May 6Loan Auction dated May 10
State Bank of India or SBI and Punjab National Bank or PNB on May 10 announced that they will hold an e-auction on May 14 under the Swiss challenge method to sell their outstanding stressed loan exposure totalling INR 3.98 billion ($48.57 million) in Parenteral Drugs (India) Ltd, setting a reserve price of INR 450 million. The bids will be invited on a 15:85–cash to security receipt basis, as well as on an all-cash basis, the announcement shows.
While SBI’s exposure in the company stands at INR 3.18 billion, PNB’s exposure stands at INR 804.7 million. Parenteral Drugs is undergoing a corporate insolvency resolution process or CIRP under Insolvency and bankruptcy code or IBC, the announcement shows.
The Swiss challenge method has been triggered by an anchor bidder, who made an offer of INR 450 million through 15:85 cash-cum- security receipt structure, thereby setting the reserve price for the auction process. The anchor bidder will have the right to match the highest bid, the announcement states.
The minimum mark up over the base bid required for the challenger bid to be considered will be 5% translating into INR 22.5 million. The interested bidders are required to submit expressions of interest, or EoIs, by May 17 and complete due diligence by June 13, the announcement states.
While the asset reconstruction companies or ARCs can participate on a full cash basis as well as on a 15:85 basis, other bidders can only bid on an all cash basis. Further, ARCs, who bid on cash: security receipt basis, have to submit bank guarantee for the security receipt portion, the announcement states.
SBI holds securities worth INR 1.12 billion against the loan exposure, which includes third party guarantee as well, the announcement states.
In another announcement on May 6, SBI said it will hold e-auctions to sell outstanding stressed loan exposure of INR 253.1 million in Kasturi Ceramics Pvt. Ltd., and INR 46.9 million in Tara Cotgin Pvt. Ltd., at a reserve price of INR 205.1 million and INR 19 million, respectively, on an all- cash basis.
ARCs, scheduled commercial banks, eligible non-banking finance companies or NBFCs, including housing finance companies or HFCs, and all eligible Indian financial institutions interested in bidding have to submit EoIs May 11 and complete due diligence by June 9.
SBI has a share of INR 331.3 million in the primary security and INR 52.8 million in the collateral security for the loan to Kasturi Ceramics, the announcement states. Similarly, it has a share of INR 4.4 million in the primary security and INR 14.7 million in the collateral security for the loan to Tara Cotgin, the announcement shows.