Letter of Intent issued to Hazel Mercantile consortium for Reliance Naval

The Swan Energy-led Hazel Mercantile consortium has been issued a Letter of Intent (LoI) as the winning bidder for Reliance Naval shipyard.

This marks yet another step towards the resolution of Anil Ambani's bankrupt Reliance Naval and Engineering Ltd, formerly known as Pipavav Shipyard.

Sources have told Business Today TV that Swan Energy will provide the performance bank guarantee as per the norms by Tuesday, following which the Committee of Creditors (CoC) will refer the winning bid for ratification to the National Company Law Tribunal (NCLT).

The Hazel Mercantile consortium's resolution plan was approved with nearly 95 per cent of the lenders voting in favour by the end of voting last Thursday.

Sources added that the Anil Ambani-led Reliance Infrastructure's last-minute counter offer to wrest back control of the shipyard has been unanimously rejected by the lenders.

The latest development is a significant milestone in the long-drawn saga of the resolution process of Reliance Naval which began over 26 months ago to recover over Rs 12,429 crore owed to financial creditors including the State Bank of India and the Union Bank of India among others.

As voting on the bids neared its end, Reliance Infra had launched a twin-pronged effort to try and wrest back control of what was the largest private defence shipyard in India.

As part of that last-ditch effort, Reliance Infra had moved to torpedo Mumbai-based industrialist Nikhil V. Merchant's bid by questioning his eligibility to participate in the bidding for Reliance Naval.

Reliance Infra's plea to declare the Hazel Mercantile consortium as ineligible to bid was heard by the Ahmedabad bench of the NCLT last Monday. The NCLT directed the resolution professional of Reliance Naval and Hazel Mercantile to file a response on the issue of maintainability within a week. The court will hear the matter next on March 30.

A consortium of two companies - Hazel Mercantile Ltd and Swan Energy Ltd - has bid around Rs 2,700 crore for the bankrupt shipyard. This bid was accepted by the resolution professional of Reliance Naval after a legal process three months ago.

Under the IBC, a bid for a bankrupt asset can only be accepted once the eligibility is verified. The Hazel Mercantile bid had been accepted on December 13 last year.