Matix Fertilisers & Chemicals Limited, a company founded by Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia, settled its entire Rs 4,500 crore debt by entering a one-time settlement (OTS) of Rs 3,082 crore with its creditors, three people with knowledge of the matter said.
This is one of the largest OTS deals struck in recent times wherein all lenders agreed to settle their dues outside the National Company Law Tribunal (NCLT), said one of three people, a senior bank official who did not want to be named.
The deal was concluded in August after three years of negotiations between lenders and the company. The OTS offer equates to 68 paise on every rupee owed.
The recovery of Rs 3,082 crore will boost the earnings of lenders in the second quarter of the current financial year. IDBI Bank Limited, State Bank of India, Canara Bank, Axis Bank Limited, Central Bank of India, Bank of Baroda, Bank of India, Union Bank of India, Punjab National Bank, Exim Bank and financial institution India Infrastructure Finance Company (UK) are the creditors.
This would be the second-largest recovery for lenders this quarter, said one of the three people cited above. The highest this quarter is expected to come from Piramal Capital & Housing Finance Limited --Rs 37,250 crore -- for acquiring Dewan Housing Corporation Finance Limited (DHFL), as reported by Moneycontrol.com
The all-cash offer to settle the dues of lenders was funded by Russia-based VTB Bank and Matix Fertilizers Holding Ltd, said one of three people cited in the first instance.
Essar Group has often done business with Russia’s VTB Group. In early 2018, VTB Bank provided $330 million to Essar Group to delist Essar Oil Ltd shares from BSE Limited; before this, VTB provided a loan of $1.2 billion to delist shares of Essar Energy from the London Stock Exchange, according to a report by the Hindu Businessline in March 2018.
VTB acted as an advisor to Essar on the sale of its stake in Essar Oil to Russia’s Rosneft, according to a Reuters report. VTB Capital partnered with Rewant Ruia- promoted Numetal to bid for Essar Steel-which was finally acquired by ArcelorMittal-Nippon Steel.
VTB Bank and Matix Fertilisers did not respond to requests for comments
A Kolkata-based, unlisted ammonia and urea producer, Matix Fertilisers, had offered lenders an OTS of 78 paise on a rupee but this offer was reduced to 68 paise post the outbreak of the COVID-19 pandemic, the people with knowledge of the development said.
In the last fiscal year, lenders conducted a Swiss auction inviting bids for their Rs 4,500 crore debt with the OTS offer from Matix as the anchor bid. After the lenders failed to receive any firm bid, they accepted the OTS offer from Matix, the people said. SBI Capital Markets was appointed as the process advisor for the transaction.
Mauritius-based India Agri Holdings Limited holds a 51.33 percent stake, Matix Fertilisers Holdings owns 42.56 percent and NSK Holdings Private Limited 6.11 percent, according to an SBI Caps document. Matix had paid lenders 5 percent of the OTS amount in September 2020 when submitting a binding bid to lenders.
Under the agreement between a consortium of 11 lenders led by IDBI Bank and Matix Fertilisers, the company had to make a payment by the end of January but the payment was delayed for over six months. The company informed lenders that there was a delay in arranging funds because of travel restrictions on account of the COVID-19 pandemic. Lenders extended the payment deadline twice – to 31 March and later to the end of July, the people said.
Apart from receiving Rs 3,082 crore as the settlement amount, lenders also recovered 9 percent interest on the OTS because of the delay in its execution, said the first person quoted above.
The company has a single stream 2,200 metric tonnes per day (MTPD) ammonia plant, a 3,850 MTPD urea and a 54-megawatt captive power plant located in Panagarh near Durgapur, West Bengal, according to its website.
Matix has had a gas supply and power agreement with GAIL (India) Limited for 15 years to supply 2.47 mmscmd (million metric standard cubic meters per day) of natural gas through the Urja Ganga Gas Pipeline, according to the SBI Caps document.
Prime Minister Narendra Modi launched the 2,540-km gas pipeline connecting Uttar Pradesh to Odisha to provide piped cooking gas to households of Varanasi.Matix was in the limelight in February 2021 when Modi inaugurated a 348-km stretch of the Urja Ganga Gas Pipeline connecting Dhobi to Durgapur where the Matix plant is located. The commissioning of the Dhobi-Durgapur Gas Pipeline will enable Matix to avail of supplies from Essar Oil’s Raniganj coal block.