NARCL may wind up SEFL the equipment finance arm of Srei group; likely to retain SIFL

After NARCL emerged as the winning bidder for the two Srei group firms — Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) — through a bidding process in February, the Kolkata bench of the National Company Law Tribunal (NCLT) approved the resolution plan of the state-owned asset reconstruction company NARCL for takeover of the twin Srei firms under Insolvency and Bankruptcy Code.

“According to the resolution plan submitted, the NARCL will cease all fresh lending activities in the group’s equipment financing arm — SEFL, and after recovering the outstanding debt, it will be ‘wound up’,” the PTI reported citing the official sources.

The loan repayment process may extend for the next seven years, the sources added.

At present, most of the assets remain within SEFL’s books due to a previous restructuring.

“As outlined in the resolution plan, NARCL, upon assuming control of the companies, will abstain from pursuing fresh lending from SEFL. The non-banking financial company (NBFC) will be dissolved once its outstanding debt is recuperated and ongoing court cases are settled,” the PTI reported citing official close to the development.

“SIFL with a cleaner balance sheet and a few legal imbroglios will be revitalised, and fresh lending operations will be conducted under this entity. Regulatory authorities are also aligned with this perspective, as previously discussed,” the official said.

This strategy aims at ensuring business continuity and safeguarding employment.

In February, the Committee of Creditors (CoC) for the Srei group firms endorsed NARCL’s resolution plan, as the company has garnered the highest vote share of 89.2%.

There were three final contenders for Srei companies.

NARCL offered a Net Present Value (NPV) bid of ₹5,555 crore. 

Authum Investment and Infrastructure secured the second-highest vote with 84.86% through a bid of ₹5,526 crore. The consortium comprising Varde Partners and Arena Investors with a financial bid of approximately ₹4,680 crore, secured the third spot with around 9% of the vote, according to the official.

The total value of NARCL’s resolution plan stands at ₹14,301 crore, encompassing a cash component of ₹3,001 crore, debentures and security receipts amounting to ₹3,300 crore, along with an uncommitted payment of ₹8,000 crore via Optionally Convertible Debentures (OCDs).

Updated: 13 Aug 2023, 07:36 PM IST