Jobaaj Stories
Adani Ports and a group entity of mining giant Vedanta have reportedly submitted binding financial bids for the debt-laden Karaikal port before the close of the bidding deadline on September 30th.
Karaikal Port is a deep water port built under Public Private Partnership in terms of the concession awarded by the Government of Puducherry. The port, developed over an area of 600 acres, was commissioned in April 2009 & is located 300 km away from the Chennai Port near the town of Karaikal in the Union Territory of Pondicherry.
The Puducherry government had granted a 30-year concession to operate a port in Karaikal after which, MARG Limited, an infrastructure developer, incorporated an SPV to develop the infamous port in 2009.
Hero Motocorp to launch its first-ever EV segment, read why it got delayed so much.
The port had loans from several lenders, 11 to be exact. Indian Bank, Allahabad Bank, Punjab National Bank, United Bank of India, Oriental Bank of Commerce, Syndicate Bank, Central Bank of India, Indian Overseas Bank, IIFC Limited, State Bank of Hyderabad, and Corporation Bank had lent a sum of Rs 1,362 crores to the port.
Although the port handled a variety of materials like coal, sugar, cement, fertilizers, project cargo, agro commodities, liquid cargo, and containers, its loans kept growing and payments became irregular and interest kept piling on.
All lenders barring State Bank of Hyderabad and Corporation Bank decided to withdraw as they sold their debt to Edelweiss ARC in 2015. At the time, Edelweiss took drastic steps to improve the port's operations and converted part of its debt exposure to equity, holding 11% of the company. At the end of 2019, the port, however, had a negative net worth of Rs 42 crores according to MCA filings.
However, in November 2021, Edelweiss ARC ultimately sold the debt worth Rs 2,059 crores and its 11% holding for a consideration of Rs 1,500 crores to Omkara ARC (a haircut of 27%).
In April 2022, Omkara ARC filed a plea with the NCLT after which NCLT Chennai admitted Karaikal Port for insolvency after the port defaulted. In August this year, Adani Ports, Vedanta, JSW Infrastructure, Jindal Power, and a JV between RKG Fund and Sagacious Capital submitted their EoIs for acquiring the port.
Industry experts suggest that Adani Ports could be the winner in this deal. If Adani Ports manages to successfully acquire the port, it will be the company's second port acquisition under IBC, the first being the Digha Port in Maharashtra.
However, investors were not pleased with the news as the stock fell 4.4% to close at Rs 784.40 per share, down 16.5% in 7 trading sessions.
Article by Aman Agarwal.
This news piece is brought to you in association with jobaaj.com
