RIL could be sole bidder for JBF Petrochem, which defaulted on Rs 5K-cr loan

Reliance Industries is likely to be the sole bidder for Mangalore-based JBF Petrochemicals, which is up for sale for defaulting on bank loans worth Rs 5,000 crore. Lenders have extended the deadline for submitting bids for the second time from Saturday as several players, including public sector companies, redesign their acquisition plans, sources say.

“There were several companies that had submitted their expression of interest (EOI) for the venture but after due diligence decided to pull out of the race,” a source familiar with the development said. “The new deadline for submitting financial offers is the end of August,” the source said. Indian Oil Corporation in association with ONGC are also likely to bid.

IDBI Bank and the other consortium lenders, including Indian Overseas Bank, Bank of Baroda and Union Bank of India, had lent JBF Petrochem $464 million for the Mangaluru project. The project involved the construction, development and establishment of a 1.25 million tonnes per annum purified terephthalic acid (PTA) manufacturing plant which was to be among the largest of its kind in India.

In 2018, RIL made an offer to lenders to take over the university and made a detailed presentation to lenders on its turnaround plan. According to banking sources, KKR Jupiter Investors Pte. Ltd (KKR) had also expressed interest in resolving the stress with a proposal to settle 100% of the banks’ outstanding principal.

According to JLF (Joint Lenders Forum) meeting minutes, the lenders were in principle grouped together to implement KKR’s resolution plan involving a change in management with an OTS (single settlement) offer of at least 100 % of the principal, provided that the same amount is paid in March 2018. However, on the same day, the financial creditors recalled all of its debt to the tune of US$260 million.

Also on March 23, 2018, a notice of invocation of pledge was issued by the security trustee IDBI guardianship services requesting the payment of a fee of US$14.76 million, due to the non-compliance by the company of its repayment obligation. These payments had to be made within three days of the date of notification, failing which the pledge constituted on the shares held by JBF Global in JBF Petrochem was invoked.

While the lenders and JBF were in talks, two new investors, Edelweiss and Indian Oil Corporation, also expressed interest in taking over the project. However, the financial creditors issued another notice dated March 31, 2018, referencing the recall notice and detailing the details of the default.

In May 2018, JBF entered into a binding term sheet with KKR for the purpose of resolution and restructuring of the account and it was proposed to implement the resolution plan with the restructuring of the debt owed to the various lenders, including the financial creditors. But the lenders rejected the plans and sent the company for IBC debt resolution.

After the company was sent in January 2016 for debt settlement under the IBC, seven companies had submitted their EoIs by July, including RIL. Among these, Jindal Power has already left the race. Reliance, meanwhile, acquired the secured assets of JBF Industries, a BSE-listed entity, from CFM Asset Reconstruction Private.

RIL has not commented on his plans.

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