Oil and gas explorer ONGC and natural gas transmission and marketing firm GAIL India have separately initiated preliminary talks with lenders of KKR-backed JBF Petrochemicals to explore the possibility of buying the distressed firm, which is on the block, said two people with knowledge of the matter.
The offers from the state-owned entities came within months of Assets Care & Reconstruction Enterprise (ACRE) and Dubai-based entity Citax Energy giving indicative offers to the lenders, the people said.
ACRE, an asset reconstruction company in which Ares SSG Capital holds a majority stake, has given a cash offer of $160 million (about Rs1,188 crore) to lenders to acquire the company, while Citax has offered $190 million (Rs1,411 crore), the people said.
The state-owned firms have met lenders of JBF Petro and sought time to make a firm offer, one of
the people cited above said.
Mid-July this year, BoB Capital Markets, the process advisor for lenders, invited potential bidders for lenders' exposure of $463.38 million (Rs 3,444 crore) as of September 30, 2020. Although ACRE and Citax submitted expressions of interest, those were not followed by firm bids by either of them. ACRE had sought a 90-day exclusivity clause - implying lenders will not engage with any other bidder during that period. Lenders rejected this proposal.
ACRE, Gail and ONGC did not respond to request for comment till press time Thursday. Citax could not be reached for comment.
Bhagirath Arya and family-promoted JBF Petro partnered with private equity firm KKR to set up a 1.25 million tonne per annum PTA plant at Mangalore in Karnataka. A delay in the construction of the plant led to cost overrun, resulting in the delay in repayment of loans. The plant was not completed and has been shut since 2017.
For JBF Petro, IDBI Bank and Bank of Baroda provided foreign currency loans through external commercial borrowings of $251.53 million and $55.77 million, respectively. Indian Overseas Bank and Union Bank of India have rupee-denominated loan facilities equivalent to $55.77 million and $33.49 million, respectively. Both these banks have converted their foreign currency loans into rupee loans following approval from the Reserve bank of India. Exim Bank has $66.82 million in a foreign currency term loan, according to a sale document issued by BoB Caps.
JBF Industries is the parent company of JBF Petro. In July, all lenders to JBF Industries, except for Tamilnad Mercantile Bank, sold their entire principal loan exposure of Rs 2,410 crore to CFM ARC sset Reconstruction Company at an unchallenged Swiss auction for Rs 825 crore. This equates to a recovery of 33% for lenders.
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