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Shapoorji, Liberty House, M&M in Race to Buy ABG
The Economic Times  |  October 13, 2017

Indulal pm Mumbai

Mahindra & Mahindra (M&M), Shapoorji Pallonji Group and Liberty House of the UK are competing to acquire debt-laden ABG Shipyard, as a consortium of lenders led by ICICI Bank increased efforts to sell the company to recover money.

 

All three have separately bid for the assets with offers ranging between Rs 3,000 crore and Rs 3,500 crore, under which the lenders will have to take a haircut of around 70% on the total outstanding debt of the company, sources with direct knowledge of the matter told ET.

 

ABG has a total outstanding debt of around Rs 16,400 crore to 22 lenders and the company is among the 12 firms identified by RBI and referred to the National Company Law Tribunal (NCLT) bankruptcy proceedings under the Insolvency and Bankruptcy Code.

 

“The bids have come and we need to examine and sit with each of them about the specific offers and the processes. It will take at least 8-12 weeks to take a final call on the bids,“ said one of the sources.

 

When contacted, Liberty and ICICI Bank declined to comment. Mails sent to M&M, Shapoorji Pallonji Group and ABG Shipyard remained unanswered till the time of going to press. PwC and SBI Capital Markets are running a formal process to identify a buyer for the company .

 

Earlier in March, lenders led by ICICI Bank increased their stake in the company to 51% and took control of the ship builder after it failed to repay the loans. Lenders have acquired majority stake in the company upon converting part of their debt into equity under the strategic debt restructuring scheme. Under this scheme, lenders are allowed to take a controlling stake in a defaulting company by converting debt into equity at a market related price and sell it to prospective buyers within 18 months.

 

ICICI Bank has the highest stake at 11% followed by IDBI Bank, Oriental Bank of Commerce and Punjab National Bank at 7% stake each, while Dena Bank has 5.7%. The 22 lenders had restructured the loan of ABG Shipyard in 2013 under a corporate debt restructuring plan, which involved huge haircut and infusion of fresh funds. However, the company did not revive thereafter, and lenders decided to invoke SDR two years ago.

 

Established in 1985 in Ahmedabad, ABG has shipbuilding operations in Surat and Dahej in Gujarat. Following its acquisition of Western India Shipyard in 2010, it operates a ship repair unit in Goa, the largest ship maintenance facility in India.

 

The Mahindra Group, which is having a strong interest in defence and allied industries, has been looking to buy strategic assets for some time now.

 

The firm did make an attempt to acquire Pipavav Defence, but lost out to Anil Ambani Group in 2015.

 

Shapoorji Pallonji Group has strong business interest in shipping business. Last year, it agreed to buy a 51% stake in Odisha's Gopalpur port, while it signed a definitive agreement in 2016 to acquire Karaikkal port in Tamil Nadu from Marg Constructions and its private equity investors, including Jacob Ballas and Standard Chartered Private Equity .