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The state-run natural gas company, Gas Authority of India Limited (GAIL), has emerged as the victor in the battle to acquire debt-laden JBF Industries' petrochemicals arm: JBF Petrochemicals.
For the unversed, JBF Petrochemicals is a manufacturer of Purified Terephthalic Acid (PTA). PTA is used in the manufacture of textiles, food-grade plastics, and bottles, and as a coating in the paint and steel industries.
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Discussions for the sale of JBF Petrochemicals first began in 2017. Lenders of the company, which include IDBI Bank, Indian Overseas Bank, Bank of Baroda, EXIM Bank, and Union Bank of India, invited bids to sell a 51% stake in the company along with its debt, but none of the bids were upto the mark.
Reliance, CFM ARC, ONGC, IOC, and GAIL were rumored to be in talks to take over the debt-laden company, but the same yielded no results. Finally, the company was admitted into insolvency proceedings under IBC 2016 by NCLT Ahmedabad.
"Vide Letter of Intent (Loi) dated 16.10.2022, the Resolution Professional in the matter of CIRP has informed that GAIL (India) Limited has been declared a Successful Resolution Applicant and GAIL's Resolution Plan received the affirmative vote of 100% of the members of the Committee of Creditors (CoC) by value and has been approved as per the requirements of the IBC," GAIL said in a regulatory filing.
Now, GAIL will be submitting a Performance Security according to the terms of the RFRP, which is around Rs 200 crores i.e. 10% of its bid of around Rs 2,015 crores. However, considering the large debt of around Rs 4,700 crores, GAIL's bid, which was significantly higher than the others, is a 57% haircut to the lenders.
Shares of GAIL currently trade flat at around Rs 85.20 per share. On the other hand, shares of JBF Industries surged 9.9% as it currently trades around Rs 12.20 per share.
Article by Aman Agarwal.
This news piece is brought to you in association with jobaaj.com
