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The Swiss challenge auction is scheduled on February 27, according to a notice issued by the bank early this week. If the offer by the ASREC is not challenged, it will equate to a recovery of 40 paise on a rupee for J&K Bank.
Separately, an offer by ASREC (India) to Union Bank of India early this month for the KSK Mahanadi and its ancillary company Raigarh Champa Rail Infrastructure debt had triggered a Swiss challenge auction, as reported by ET on February 14.
ASREC is backed by Life Insurance Corporation (LIC) and three PSU banks – Indian Bank, Bank of India and Union Bank of India. Deutsche Bank has a small stake in the ARC.
Union Bank had invited counteroffer from ARCs on February 7 for the sale of its ₹2,077 crore KSK Mahanadi Power and ₹54 crore Raigarh Champa Rail debt. ASREC has offered ₹828 crore for the power company and ₹38 crore for its subsidiary. Union Bank will hold a Swiss auction on February 15.
Several lenders have exited KSK Mahanadi Power in the last two years. Recently, LIC sold its ₹613 crore debt to power producers to Rare ARC for ₹188 crore in an all cash transaction. The sale was concluded on January 23 this year.
Last July, SBI had sold ₹3,815 crore debt in the thermal power company for ₹1,622 crore, equating to a recovery of 42 paise on a rupee, as reported by ET on August 12.Aditya Birla ARC has also acquired the thermal power producer’s loans in the last two years from Punjab National Bank, Bank of Baroda and Axis Bank.
The distressed thermal power producer operates three 600 mw units in Chhattisgarh and has been undergoing insolvency proceedings for nearly four years.
Two ancillary companies – KSK Mahanadi Water, which operates a water pipeline to the power plant, and Raigarh Champa Rail, which carries raw material to the plant-are undergoing insolvency proceedings separately.
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