Sagar Cements Frontrunner for Andhra Cements Aquisition
Sagar Cements is the frontrunner for Andhra Cements, a Jaypee Group company undergoing insolvency proceedings. Andhra Cements' lenders received expressions of interest from Sagar Cements, B C Jindal's Jindal Poly Films, Dalmia Cement (Bharat) Ltd and Khandwala Finstock Pvt Ltd. Hyderabad-based asset reconstruction company (ARC) Pridhvi Asset Reconstruction and Securitisation Company (Paras) had acquired ?1,012 crore in principal loans from Edelweiss ARC and Karur Vysya Bank in September last year for ?434.6 crore. The acquisition by Paras was financially supported by stock exchange-listed Sagar Cements. Paras has an 86% share of verified debt; Union Bank of India and State Bank of India have about 11% and 3%, respectively, of the financial claims. Through this bankruptcy resolution, lenders hope to recover about 40-45% of their claims. Deloitte-backed RP Nirav Pujara has admitted ?1,356 crore by way of claims from financial creditors. Sagar Cements would have to shell out more if it were to acquire Andhra Cements outside the ambit of the Insolvency and Bankruptcy Code. First, since Andhra Cements is listed, Sagar Cements would be required to make an open offer to the public immediately after buying 25% of the equity in it. Second, it would be liable to pay the entire government and trade creditors' dues. However, upon being admitted for insolvency, operational creditors and the government authorities have to accept the haircut offered by the successful bidder, thus lowering the acquisition cost.Having acquired majority debt, Paras could control all the resolutions passed by the committee of creditors. Under insolvency proceedings, a critical resolution can be passed only if 66% of the creditors, by the value of debt, vote in favour of the resolution. Sagar Cements has a production capacity of 8.25mtpa (metric tonne per annum) at the end of March 2022, and its plans to achieve 10 mtpa capacity by FY25. It has three integrated cement plants, two grinding units and two captive power thermal plants. It has a total debt of ?1,503 crore.
Tags : Sagar Cements Frontrunner Andhra Cements Aquisition Jindal Poly Films Dalmia Cement (Bharat) Ltd Khandwala Finstock Pvt Ltd.