MC: Suzlon Energy surges 31% as Danish firm may buy controlling stake in co

22 February 2019: Shares of Suzlon Energy rose 31 percent on the back of report that a Danish firm may buy controlling stake in the company.

Vestas is in talks with Suzlon to buy a controlling stake in the company, reported CNBC-TV18, quoting sources.

According to sources, negotiations between Vestas & Suzlon with respect to the valuation is currently in progress, while Vestas is expected to make an open offer post the deal with Suzlon.

However, the deal with Vestas will need approval from Suzlon’s lenders, it added.

At close, Suzlon Energy was at Rs 5.80, up Rs 1.37, or 30.93 percent on the BSE.

Moneycontrol reported

DNA: Tata Steel lends further support to ailing equipment maker TRF

22 February 2019: Tata Steel has decided to continue supporting its ailing group outfit, TRF Ltd, maker of earthmoving vehicles and construction equipment.

With infrastructure and construction sector reeling under sustained slowdown, listed entity TRF’s losses continue to pile up. This has forced Tata Steel to infuse an additional Rs 250 crore in the form of preference shares into its arm.

This is over and above the assistance in the form of related party transactions worth around Rs 255 crore committed for the ongoing financial year as the company continues to explore ways to increase business and assistance from the promoter entity. TRF’s losses widened from Rs 18.54 crore in the September quarter to Rs 24.50 crore in the October-December period.

With accumulated losses touching Rs 406 crore, the company’s net worth has been fully eroded. Its receivables have been impacted as some of the major over-leveraged companies in the infrastructure, power generation and steel sector have been referred to the National Company Law Tribunal under Insolvency and Bankruptcy Code.

TRF, in which Tata Steel holds a 34.11% stake, has been selling off some of its overseas ventures that were set up when the market conditions were favouarble.

During the December quarter, it sold off its step down subsidiary Dutch Lanka Trailers LLC, based in Oman, at book value that resulted in a loss of Rs 63 lakh.

Earlier this year, TRF Singapore Pte sold the shares of its arm York Transport Equipment Pte and its subsidiaries for a total consideration of Rs 291 crore to SAF Holland. As a result, TRF Singapore took a hit of Rs 83 crore in the value of the investments as its capital base was subsequently reduced.

“The company expects to generate cash flow from improvements in operations, increased business and assistance from the promoter entity currently under discussion, proceeds from restructuring of its subsidiaries,” TRF disclosed in its December earnings details.

It is not just TRF, Tata Steel had earlier extended financial support to another group outfit, listed packaging container maker Tinplate Company of India through related party transactions in the form of sourcing hot rolled coils worth up to Rs 1,800 crore.

DNA reported

ET: Religare Finvest files insolvency petition

22 February 2019:  The new management of Religare Finvest has filed an insolvency petitionalleging diversion of funds by erstwhile promoters Malvinder and Shivinder Singh. 

The National Company Law Tribunal (NCLT) will hear the petition against a cluster of 19 companies that are allegedly linked to the brothers, said two people with the direct knowledge of the matter. The companies were used to siphon off loans, they said. Religare Finvest has claimed Rs 2,257 crore from the former promoters. 

The non-banking finance company (NBFC) didn’t respond to queries. The matter will be heard by the NCLT’s Delhi bench in early March. 

The 19 companies, which include A&A Capital Serivces, AD Advertising Pvt, Artifice Properties Pvt and Volga Management and Consultancy, had allegedly been sanctioned loans as the promoters vouched for them. An external audit was also conducted to prove the links, said the people cited above. 

This comes as the Singhs appear to be at war with each other. Shivinder Singh alleged in an NCLT petition that Malvinder Singh and Sunil Godhwani, the former chief of Religare Enterprises, colluded to divert Rs 750 crore from Religare Finvest and another Rs 473 crore from Fortis Healthcare to RHC Holding, the flagship holding company of the Singh brothers, ET reported on September 7 last year. More recently, Malvinder accused Shivinder, the spiritual head of the Radha Soami Satsang Beas and Godhwani of criminal conspiracy, cheating and fraud for allegedly siphoning off thousands of crores from RHC Holdings. 

Under new management, financials seem to be improving. Religare Enterprises posted a loss of Rs 10.33 in the December quarter, down from Rs 45.14 crore a year ago. Total income rose to Rs 12.23 crore from Rs 11.85 crore, it said in a regulatory filing on Tuesday.

The Economic Times reported

FE: ERA Infra bankruptcy: Lenders may consider ‘stalking horse’ bidding

22 February 2019: Lenders to Era Infra Engineering are hoping to put a floor price while inviting bids for the company, its joint ventures and special purpose vehicles.

A senior banker explained the consortium might consider a ‘stalking horse’ bid while auctioning the entities. The terms of such an auction are yet to be fully agreed on between the members of the consortia of Era, the JVs and SPVs. Sources said the process could be time-consuming since a large number of financial creditors are involved.

Union Bank’s plan calls for mutual consent among members of the consortium to sell Era together with the SPVs and JVs and not as a stand-alone entity since that would ensure a better value for all stakeholders. The plan entails appointing a common resolution professional (RP) and a single bidding process for the consolidated entity.

At its third quarter earnings conference, Union Bank of India mentioned it was testing a model in case of Era Infra Engineering, where it is the lead bank, that seeks to bundle the parent company and the SPVs for the purpose of a holistic resolution.

The process can begin once the NCLT (National Company law Tribunal) approves the method.The proposal drawn up by Union Bank of India suggests having a common CIRP process for Era Infra and its master SPV Era Infrastructure India and at least six others, including Bareilly Highway Projects, West Haryana Highway Project, Haridwar Highway Project, Dehradun Highway Project and Hyderabad Railroad Project.

Of these, four are being referred to the NCLT by ICICI Bank and one other bank.

The proposal to have a stalking horse bid with the consortium of lenders bidding for Era and its JVs and SPVs is to ensure the process is more competitive. The share of each creditor would be in proportion to one’s admitted claims.

These include admitted claims accruing from corporate guarantees, promoter undertakings, put options agreements provided by Era Infra Engineering to the SPVs, according to papers reviewed by FE.

The proposal involves breaking down the debt at the consortium level into sustainable and unsustainable categories. The sustainable debt would further be broken down lender-wise based on the current security structure while unsustainable debt is to be converted to instruments backed by arbitration claims of the respective SPVs.

Era Infra Engineering, the flagship company of the Era Group, is part of the first stressed assets’ list flagged by the Reserve Bank of India to be referred to the NCLT. Era Infra was referred to the National Company Law Tribunal by Union Bank of India under Section 7 of the Insolvency & Bankruptcy Code, 2016 and later admitted under Corporate Insolvency Resolution Process on May 8, 2018.

Era Infra’s major business divisions include the engineering, procurement and construction (EPC) business alongwith equipment management, putting it in the same league as the likes of IVRCL, Unity Infra projects and Lanco Infratech— the flagship company of the Lanco Group— that was posted for liquidation by the Hyderabad NCLT bench in August last year.

Thus far, EPC firms in whose cases the resolution process under IBC has concluded have largely ended in liquidation. These firms hold little value by themselves, largely deriving value from the investment it holds in its SPVs and from the EPC work it undertakes for its SPVs.

The proposed framework for resolution by Union Bank of India, however, could set a precedent for EPC companies going ahead. The value of the business of EPC firms as a going concern depends on three core assets of technical credentials commonly know as Pre Qualifications (PQs), order book and key skilled personnel.

A fallout of an EPC company going under IBC is generally termination and termination related disputes by the counterparts of underlying project agreements and invocation of performance bank guarantees, depletion of its order book size for various reasons such as EPC companies not bidding for fresh projects during insolvency period and termination of engagement by the key skilled personnel.

These reasons majorly contribute to value deterioration of the assets of EPC companies under IBC which in turn reduces bidder participation and bidder interest.

The Financial Express reported