Canara Bank led consortium seeks bids to sell Rs 1,226 cr loans in MMOPL

Mumbai Metro One is a SPV that is jointly owned by Reliance Infrastructure and MMRDA

A consortium of lenders led by the state-owned Canara Bank is seeking binding bids to sell Rs 1,226.13 crore of non-performing loans in Mumbai Metro One Private Limited (MMOPL) through a Swiss challenge auction on November 28.

 

MMOPL is a special purpose vehicle (SPV) that is jointly owned by Reliance Infrastructure and Mumbai Metropolitan Region Development Authority (MMRDA).

 

The lenders have set a reserve price of Rs 1,063 crore for the sale of loans, based on an anchor bid they have received, which translates to a recovery of 86 per cent. The counter bids by entities interested in acquiring the loans have to be 5 per cent above the reserve price and on an all-cash basis.

 

While Reliance Infrastructure, a part of Reliance Group, holds 74 per cent equity share capital of MMOPL, the rest 26 per cent is held by MMRDA – a Maharashtra government body that is engaged in long-term planning and implementation of strategic projects and financing infrastructure development in the Mumbai metropolitan region.

 

MMOPL connects the Versova-Andheri-Ghatkopar corridor through a metro rail service. It was the first metro project awarded in the country on a public-private partnership basis and entailed the design, financing, construction, operation, and maintenance of about 12 kilometres of an elevated metro with 12 stations en route.

 

Other lenders in the consortium that lent to MMOPL include State Bank of India, Indian Bank, Bank of Maharashtra, and IDBI Bank.

 

Apart from the domestic lenders, the metro project was also financed by India Infrastructure Finance Company (UK) through a term loan in the form of external commercial borrowing. However, the term loan is not part of the loans that the domestic lenders are trying to sell.

 

IDBI Capital Markets and Securities has been appointed as the process advisor for the sale of these loans.

 

Entities interested in acquiring the stressed loans are required to submit expressions of interest by November 6, following which they will be allowed to conduct due diligence on the asset until November 25. In the event of counterbids on November 28, the anchor bidder will have the chance to match any counterbid; if they do not, the counterbid will be considered the winning bid.

 

The anchor bidder can match the counter bidder either on a cash basis on Net Present Value terms; or on cash cum security receipts basis, after discounting the offered security receipts at a one-year MCLR rate of Canara Bank currently at 8.90 per cent per annum for three years.

 

However, if there are no counterbids in the Swiss auction, the anchor bidder will be declared the successful bidder, subject to approval from the lenders.