Mumbai: Creditors of Monnet Ispat and Energy Ltd and Jyoti Structures Ltd have called for fresh bids from potential suitors of the two companies which are in bankruptcy court, citing new criteria to assess bidders, two people with direct knowledge of the development said.
The deadline for the submission of rebids will end this week, said the two people, who requested anonymity.
Both Jyoti Structures and Monnet Ispat, which are facing bankruptcy proceedings in the National Company Law Tribunal (NCLT), have separately received only one binding offer.
AION Capital Partners Ltd and JSW Steel Ltd made a binding offer for Monnet Ispat; Jyoti Structures, which received initial interest from several potential acquirers, finally got a single binding offer from a consortium of high net-worth individuals (HNIs).
An email requesting comment sent to Vandana Garg, the interim resolution professional (IRP) for Jyoti Structures, remained unanswered as of press time. A spokesperson for Sumit Binani, the IRP for Monnet Ispat, declined to comment, citing client confidentiality.
“The lenders, which include both private and public sectors banks, have decided to introduce a weightage-based evaluation and scoring system which will be henceforth applicable to all bidders looking to acquire assets up for change in control and resolution under the Insolvency and Bankruptcy Code (IBC)," said one of the two people cited above.
“The IRPs have accordingly shared the copies of the circular listing the changes in evaluation criteria with all potential bidders."
According to the circular, a copy of which was reviewed by Mint, potential bidders will be assessed on both quantitative and qualitative parameters. The quantitative section, which carries an overall weightage of 70%, lists key criteria that include upfront cash recovery, net present value factoring in upfront cash recovery, equity upside and fresh equity.
Under the qualitative criteria, which carries an overall weightage of 30%, the bidders will be evaluated on the reasonableness of financial projection, ability to turn around stressed assets and their standing.
Emails sent to JSW Steel, AION Capital and Manish Kejriwal, co-founder of private equity fund Kedaara Capital, who is part of the HNI consortium that has bid for Jyoti Structures, remained unanswered until the time of going to press.
“The new evaluation criteria given by lenders for stressed assets has put bidders in a bind as more weightage is being given to upfront cash to be paid to the banks instead of equity investments in the stressed company," said a person close to bidders for one of the two companies.
“Bidders say apart from taking over part of loans and making investments in the stressed asset, the upfront cash to be paid to the banks will not make it feasible to bid for the large assets," the person added.
Jyoti Structures and Monnet Ispat are among the initial 12 cases that the Reserve Bank of India referred to their lenders in June for immediate resolution under the IBC. According to NCLT filings, Jyoti Structures has total debt of Rs7,000 crore and Monnet Ispat more than Rs10,000 crore.