Punjab and Sind Bank to sell KSK Mahanadi loans to ARCs

Exasperated by the delay in the resolution of KSK Mahanadi Power under the Insolvency and Bankruptcy Code-driven process, Punjab and Sind Bank plans to sell its debt to asset reconstruction companies (ARCs).

The thermal power company has been undergoing corporate insolvency for about four years.

The government-owned bank has invited offers, in full cash, from ARCs for its ₹110.5 crore loan to KSK Mahanadi Power Corporation and Rs 45.6 crore debt to KSK Water Infrastructure, according to a notice issued by the bank to the ARCs. The bank has set a reserve price of Rs 84 crore for both the loans and invited offers by January 29. The reserve price implies that the bank is seeking a recovery of at least 54% from selling the two loans.

The bank will hold a Swiss challenge auction to identify the buyer. The higher bidder will be declared an anchor offer, which will have the right to match any counter bid during the Swiss auction.

Over the past two years, a dozen lenders with about Rs 16,165 crore of verified claims have separately sold their debts to various ARCs due to delays in resolutions. As many as six ARCs jointly control 54.4% of verified claims after acquiring loans from multiple banks.

Punjab and Sind Bank’s share is just about 0.70% of the total Rs 29,330 crore claims from lenders verified by the PwC-backed resolution professional Sumit Binani.KSK Mahanadi Power was admitted for corporate insolvency in October 2019. Vedanta, Adani Power, Naveen Jindal’s Jindal Power, Dhampal Jindal’s Jindal Polymer, Power Finance Corporation, Medha Engineering and iLabs India Special Situation Fund had shown interest in acquiring it, as reported by ET earlier.It has two ancillary companies – KSK Water Infrastructure, which operates a pipeline that supplies water to the power plant, and Raigarh Champa Rail Infrastructure, which carries raw materials. Both the ancillary companies are also undergoing the insolvency process.