IDBI Bank to offload MEP Infrastructure Developers' stressed loan exposure

Toll road operator is under insolvency resolution regime

Private sector lender IDBI Bank is planning to offload about Rs 100 crore of stressed loan exposure of MEP Infrastructure Developers Ltd (MEPIDL) as part of balance sheet clean up.

MEPIDL, which is into toll collection and Operate Maintain and Transfer (OMT) business for roads and highways, is facing insolvency resolution proceedings after Bank of India, one of its lenders, took the company to National Company Law Tribunal (NCLT).

The auction is under “Swiss Challenge Method” based on an existing offer in hand, who will have the right to match the highest bid, according to a web notice by the lender placed on its website.

The Bank has an offer of Rs 75 crore — cash (84 per cent) Rs 63 crore plus security receipts worth Rs 12 crore (16 per cent), IDBI said. However, it did not name the party which had made the offer.

The lender intends to transfer its identified non-performing loan on “All Cash” or “Cash- Security Receipts (SRs) with upside sharing” to permitted entities in line with the regulatory guidelines and the bank’s policy on transfer of stressed loan exposures.

In February 2024, Acuite Rating had said MEPIDL’s bank loan rating is at “D”. The total outstanding quantum of rated loans was Rs 850 crore. The rating continues to be flagged as “Issuer Not-Cooperating” and is based on best available information.

The company has delayed in servicing its debt obligation with 12 lenders. The lenders have classified the loan as a non-performing asset. The company has reached out to the lenders for one- time settlement (OTS) of its outstanding debt. The OTS proposals submitted by the company are at various stages with higher authorities of the respective lenders for their consideration, according to MEPIDL’s BSE filing in February 2024.

On March 28, 2024, the National Company Law Tribunal (NCLT) had initiated the corporate insolvency resolution process (CIRP) against MEP Infrastructure Developers Ltd on a plea filed by Bank of India and appointed an interim resolution professional to take control of the company. The Mumbai bench of the NCLT admitted the plea under the IBC filed by the public sector lender, claiming a default of Rs 127.86 crore.

MEP Infra availed certain financial assistance from Bank of India under multiple banking arrangements (MBA) led by IDBI Bank in March 2010.