Deutsche-led group exits race for GVK’s Punjab power plant

Mumbai: A Deutsche Bank-led consortium of investors, the sole bidder for GVK Power’s 540-MW Goindwal Sahib plant in Punjab, has pulled out its bid citing uncertainties due to the Covid pandemic, once again highlighting the challenges faced by bankers in recovery of distressed debt. The German lender has conveyed to creditors that it is taking a re-look at its distressed debt strategy and is no longer interested in pursuing the transaction, people familiar with the deal said.“This is yet another casualty due to the slowdown caused by this pandemic. Buyers want to take a re-look and banks have no option in some cases. Everything looks like a challenge,” said one of the persons cited above.76842013In this case, banks still have the option of recovery through the insolvency process as Axis Bank had already filed a petition in the National Company Law Tribunal (NCLT) to start bankruptcy proceedings against the company before the government’s March 25 cut-off for bringing any fresh cases under the IBC. “Axis’ petition was filed before the lockdown, so in that sense, the NCLT route is still open. We had tried to work out a quicker route through a one-time settlement (OTS) with investors led by Deutsche but that has not worked out due to this crisis,” said a second person familiar with the case. Axis’ petition is yet to be admitted by the court.Axis did not reply to an email seeking comment. A Deutsche Bank spokesman declined to comment. A GVK spokesperson said GVK Power (Goindwal Sahib) has been pursuing both OTS and a restructuring of the loan. “Deutsche Bank is one of the parties, which made an offer to all existing lenders,” the GVK spokesperson said. “However, the lenders are asking for an improvement in the OTS number. Due to the Covid-19 lockdown, the potential investors are taking a wait-and-watch strategy. In view of the changed scenario, the company has asked for some more time for submitting a revised offer.”“In the meantime, the company is also working at various fora to improve the cash flows of the project, to enable it to become more attractive to investors and we are hopeful of achieving an amicable solution for all the stakeholders,” the spokesperson said.The spokesperson clarified that Axis had approached NCLT in December and is still actively involved in finding a resolution outside the NCLT. “The company is hopeful of a resolution outside the NCLT,” the spokesperson said.

from Economic Times https://ift.tt/31We8Ce