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The promoter of Hindustan National Glass has offered Rs 1,380 crores in cash and 10% equity in the company to its lenders in a final attempt to escape insolvency proceedings, a report by ET stated.
Hindustan National Glass and Industries Limited (HNGIL) is a market leader in India's glass container industry. It was founded by Mr. C. K. Somany in 1946 and the company established India's first fully automated glass manufacturing plant near Kolkata. Today, the company is said to have a client base spanning 23 countries.
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The glass company had been facing financial issues for quite some time as high debt and net losses had eroded the company's net worth. In May 2017, HSBC sold its entire loan to Edelweiss ARC at a discount of 40-45%, clearly indicating that lenders were in no mood to wait.
In August 2018, the company was planning to settle its debt of Rs 2,524 crores at a settlement price of Rs 2,007 crores, but the same was rejected. For the quarter ending in June 2021, the company's financials were so weak that the company's going concern assumption was invalidated by its auditors.
DBS Bank, a lender of the company, filed for insolvency proceedings against the company in October 2021, when the company owed Rs 1,710 crores to a consortium of 12 banks after it had repaid Rs 290 crores and defaulted after taking two extensions.
"HNGIL is undergoing Corporate Insolvency Resolution Process (CIRP) pursuant to the Order of the Hon'ble National Company Law Tribunal (NCLT), Kolkata Bench dated 21st October 2021. In this order, the Hon'ble NCLT has appointed Mr. Girish Siriram Juneja with IP Registration No. IBBI/IPA-001/IP-P00999/2017-2018/11646, as the Interim Resolution Professional to carry out the functions as mentioned under the Insolvency & Bankruptcy Code (IBC)" the company's website currently reads.
This offer is Mr. Mukul Somany's last-ditch effort to avoid insolvency proceedings. According to IBC, if 90% of the lenders (by value) accept the offer, the application for insolvency proceedings can be withdrawn.
Currently, Mr. Juneja has admitted a total claim of Rs 3,338 crores against the company. At the existing cash and equity offer alongside the previous recoveries, the lenders stand to recover roughly 60% of their loans. Reports state that SBI, which holds 38% of the total loan value, is in support of the settlement offer. Edelweiss, who holds 23% of the total debt, is said to be assisting the promoters with funding.
Several organizations have sent EOLs for the company. The interested parties include Danish beer maker Carlsberg, PE fund Oaktree Capital, Nirma Chemicals, AGI Greenpac, and SNJ Distilleries.
The share of HNGIL was listed on Indian bourses. The earliest data available for the company is for April 2009 when the share was priced at Rs 102 per share. The share touched its lifetime high of Rs 278.50 in November 2010 after which the stock steadily declined. Its last traded date was 20th June 2022, when it closed at Rs 15.20 per share.
Article by Aman Agarwal.
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