Moneycontrol
Oct 13, 2017 04:03 PM IST | Source: Moneycontrol.com

Shapoorji Pallonji, M&M in race to acquire debt-ridden ABG Shipyard

Shapoorji Pallonji Group, Mahindra & Mahindra, and UK’s liberty house have entered the fray to acquire the debt-ridden ABG Shipyard, a company put on sale by a consortium of lenders, headed by ICICI Bank, to recover money.

Shapoorji Pallonji, M&M in race to acquire debt-ridden ABG Shipyard

Shapoorji Pallonji Group, Mahindra & Mahindra, and UK’s liberty house are in the race to acquire the debt-ridden ABG Shipyard. The company was put on sale by an ICICI Bank-led consortium of lenders.

All the competitors have bid separately within the range of Rs 3,000 crore to Rs 3,500. This amount would barely cover ABG’s debt, and the banks will have to take a haircut of about 70 percent during recovery, the Economic Times reported.

ABG’s total outstanding debt to 22 lenders amounts to Rs 16,400 crore. The company was referred to the National Company Law Tribunal (NCLT) by RBI to go through legal proceedings under the Insolvency and Bankruptcy Code.

The company, founded in 1985 in Ahmedabad, has its shipyards in Surat and Dahej in Gujarat. After ABG acquired Western India Shipyard in 2010, it started running a ship repair unit in Goa, which is the nation’s largest ship maintenance place.

The lenders will have to sit with each bidder before anything concrete comes out. It will take a minimum of 8-12 weeks to finalise a bidder, said a source to the newspaper.

The bidders have not commented on the developments.

In March this year, the lenders of the consortium raised their stake in the company to more than half of total shares which landed them at a controlling position after ABG defaulted on loans.

The lenders had turned part of their debt into equity under the strategic debt restructuring scheme. They can sell the stakes within 18 months from the purchase
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