Indian Bank consortium seeks bids to sell ₹738 cr BLA Power bad loans

Lenders launch Swiss challenge auction with a ₹285 crore anchor bid, offering 39% recovery; counter-bids must be fully in cash

A consortium of lenders led by Indian Bank has called for bids for the sale of ₹738.18 crore of non-performing loans of BLA Power Pvt. Ltd., a coal-based thermal power company, under the Swiss challenge method with an anchor bid of ₹285 crore. The Swiss challenge auction is scheduled for March 9.

 

BLA Power, incorporated in 2006, had set up a 90-Mw coal-based power project at Gadarwara in Madhya Pradesh in two phases of 45 Mw each. 

 

The anchor bid of ₹285 crore is structured on a 15:85 cash-to-security receipts (SRs) basis. If the anchor bidder wins, it will pay 15 per cent of the consideration upfront in cash, with the balance through issuance of SRs. The bidder has also estimated an additional recovery of about ₹140 crore for lenders upon redemption of the SRs.

   

The anchor bid will lead to a recovery of nearly 39 per cent for the lenders. BOB Capital Markets is acting as the process advisor for the auction.

 

While the anchor offer follows the 15:85 cash-SR structure, counter-bids for the stressed loan asset must be submitted on a 100 per cent cash basis. Eligible bidders include banks, all-India financial institutions such as Nabard, NHB, EXIM Bank, Sidbi and Nabfid, as well as small finance banks, non-banking financial companies, including housing finance companies, and asset reconstruction companies (ARCs).

 

The minimum mark-up over the anchor bid has been set at 10.2 per cent, or ₹29 crore, implying a starting counter-bid price of about ₹314 crore.

 

If no bids are received, lenders will treat the anchor bidder as the successful bidder and proceed with the transaction, while retaining the right to negotiate for an improved offer.

 

If a challenger bid is received, the anchor bidder will be given an opportunity to match or better the offer either on an all-cash basis or on a cash-plus- SR structure. For such comparison, the SR component will be discounted at the one-year MCLR of the lead bank, Indian Bank, plus 2 percentage points (currently 10.75 per cent) to arrive at the net present value. If the anchor bidder matches or exceeds the challenger bid on a cash or NPV basis, it will be declared the successful bidder, otherwise, the anchor bidder will be the winner.