Independent Sugar Corporation (INSCO) has submitted an updated resolution plan offering Rs 2,752 crore for acquisition of India’s largest glass manufacturer Hindusthan Glass & Industries Limited (HGIL) in accordance with a Supreme Court verdict.
The resolution plan, dated June 8, offers approximately Rs 2,200 crore as an upfront payment and Rs 550 crore would be infused through equity to creditors, a copy of the resolution plan reviewed by Moneycontrol shows.
The Committee of Creditors (COC) will meet on June 12 to vote on the resolution plan submitted by INSCO, which is a company promoted by the Madhvani Group, one of the largest conglomerates in East Africa.
“It is estimated that significant capex would be required to revive and revitalize the business. We have budgeted about Rs 1,000 crore to rebuild all the furnaces and other equipment over the next few years,” the resolution plan says. “The assets have suffered in the past 10 years due to lack of investment and in recent years high level of staff turnover and strikes.”
To finance the transaction, INSCO has signed a non-binding agreement with US-based investment firm Cerberus Capital for bridge financing. However, some of the creditors have expressed concerns over the financing part since INSCO has just signed a non-binding agreement and is yet to close the deal.
“The claim of securing Rs 1,550 crores through non-convertible debentures on the basis of such a vague and unenforceable document renders the entire funding arrangement speculative at best and misleading at worst,” one of the lenders told Moneycontrol on condition of anonymity.
Originally, AGI Greenpac was the front runner for HGIL, with a bid of Rs 2,752 crore. However, the Supreme Court in January rejected the bid on the ground that the company did not have a Competition Commission of India (CCI) approval for the acquisition.
INSCO had moved the court seeking cancellation of AGI Greepac's bid since the company did not receive CCI approval.
INSCO, the second bidder for the project, subsequently became the front-runner. However, INSCO’s bid of Rs 1,850 crore was much lower than that of AGI Greepac’s. The Supreme Court asked INSCO to match AGI Greepac's bid, failing which the resolution would have gone for fresh bids. This order was aimed at ensuring maximum recovery for creditors. INSCO agreed to match AGI Greepac's offer.
HGIL, India’s largest container glass manufacturer, entered into insolvency in October 2021 for default of loans amounting to Rs 3,012 crore. The final resolution is still pending, as various legal hurdles have delayed the process.
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