Acre ARC likely to be sole bidder for Nagarjuna Fertilizers

Now, IDBI has gone for Swiss Challenge Auction. So, Coromandel Fertilizer as a strategic investor can bid as it makes best sense because Nagarjuna fertilizer and Coromandel plants share common boundary wall. Acre has bid at reserve price. Coromandel will bag Nagarjuna if it offers few crores more, a source tells Bizz Buzz

Mumbai: The stage is set for the takeover of Hyderabad-based Nagarjuna Fertilizers & Chemicals Limited (NFCL) with Acre ARC is expected to emerge as the sole bidder to acquire the fertiliser maker. The bid for NFCL will open December 31.

Backed by SSG, this ARC is known to pick stressed assets and later sell them to big players of that sector at decent profit.

Talking to Bizz Buzz, a source familiar with the development, says: "Now, IDBI has gone for Swiss Challenge Auction. So, Coromandel Fertilizer as a strategic investor can bid as it makes best sense because plants of Nagarjuna Fertilizer and Coromandel share common boundary wall. Acre has bid at reserve price and if Coromandel offers few crore more, then Coromandel should bag Nagarjuna."

In its communiqué to the prospective investors on December 15, IDBI Bank, on behalf of consortium of lenders, said that it intends to transfer the stressed loan exposure of Nagarjuna Fertilizers & Chemicals on all cash basis to eligible permitted entities in line with the regulatory guidelines and bank's policy on the transfer of stressed loan exposure. The transfer, however, will be subject to final approval by the competent authority of the lead bank and consortium lenders.

The present process is run under Swiss Challenge Method Bidding where bank/lenders have an offer of Rs811 crore and undertaking to acquire the outstanding bank guarantees (BGs) of Rs87.53 crore upon its invocation in hand, which is termed as 'Base/Anchor Bid'. Thereafter, they will invite bids from permitted entities on the comparable terms.

In addition to the amount outstanding under any disbursed loans, bank shall notify the bidder/ acquirer the details of any un-devolved Letters of Credit (LCs)/Bank Guarantees (BGs) yet to be invoked/instalments of DPGs which are not yet due, in respect of the Stressed Loans being offered for transfer by the bank. The banks shall retain pari-passu charge on the securities related to un-crystallized non-funded facilities. The transferee shall initiate all actions required to substitute with guarantee of other bank or retire the obligations under the BG by making a payment, as and when it falls due for extension/payment.

However, banks may at their discretion extend the validity of un-devolved BGs, at such commission and charges as may be acceptable to IDBI Bank/lenders in the same proportion as of the NFB (non-fund based) facilities. In case of crystallization of NFB facilities after the transfer, that portion (converted into funded) will also be transferred by the lenders to the same bidder/acquirer who shall give 100 per cent protection for the invoked amount to IDBI Bank/ lenders on all cash basis and acceptance for the same through offer letter/supplementary agreement/ assignment agreement.

However, the un-devolved LC & un-invoked BG limits backed by 100 per cent margin by way of fixed deposits will not be offered for transfer.