 "Indira Container Terminal case: Canara Bank takes Swiss auction route")
State-owned Canara Bank, the lead bank in a consortium of lenders to Mumbai-based Indira Container Terminal, has invited counter-bids from interested entities on an all-cash structure for recovering the dues of secured creditors to the company in a kind of Swiss challenge auction.
In this auction, a settlement offer from the promoters of the company is the anchor bid.
Other lenders in the consortium include Punjab National Bank, Central Bank of India, and India Infrastructure Finance Company.
The auction notice states the consortium desires to conduct a Swiss challenge process against the anchor bid in order to find a better one through online e-auction, for recovering the outstanding dues of the secured creditors, together with further interest, charges, costs, etc.
The promoters of the company have made a settlement offer of Rs 260 crore, which is now the anchor/base bid for the Swiss challenge auction, which the state-owned bank intends to conduct on August 23, according to the auction notice.
In case the bank does not receive counter-bids, the anchor bidder, the settlement offer from the promoters, will be declared the successful bidder. Additionally, the anchor bidder will get the “right of first refusal” if counter-bids are received in the auction process.
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Counter-bids, if any, have to be submitted with a minimum markup of 5 per cent on the anchor bid, i.e. Rs 273 crore. And, entities interested in bidding for the asset have to submit an expression of interest (EoI) by August 19.
Additionally, the state-owned lender has established eligibility criteria for entities wishing to submit counter-bids. They must have a minimum net worth of Rs 250 crore as of the last financial year, and a minimum annual turnover of Rs 50 crore for each of the last three financial years.
Further, the bidder has to furnish an earnest deposit amount of Rs 45 crore.
Canara Bank has specified in case the successful bidder in the auction process is not the anchor bidder, the lenders may facilitate a change in management and control of the company in favour of the successful bidder. This can be achieved by invoking the pledge of 51 per cent of the company’s equity shares, implementing a substitution agreement, or following the Prudential Framework for Resolution of Stressed Assets issued by the Reserve Bank of India on June 7, 2019.
Previously, Canara Bank had moved the National Company Law Tribunal in 2023 against the company because it had failed to pay its dues of Rs 312 crore, including the outstanding principal and interest.
Consequently, in May, Indira Container Terminal was admitted into the corporate insolvency resolution process (CIRP), and Dinesh Kumar Aggarwal was appointed interim resolution professional.
Indira Container Terminal is a joint venture between listed infra firm AJR Infra and Tolling (the erstwhile Gammon Infrastructure Projects Ltd) and Noatum Ports Sociedad Limitada.
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