ABG Shipyard Gets Two Bidders, But Not For Shares
Bidders express interest in buying assets of the company, not shares owned by lenders.
Seeking to recover loans worth Rs 17,000 crore, lenders of debt-laden ABG Shipyard Ltd. have put the company on the block but none of the bidders appear to be interested in buying shares.
The consortium of about two dozen banks, led by ICICI Bank Ltd., has mandated SBI Caps to find a buyer for their 51 percent equity, which lenders got after the conversion of debt, which is believed to have attracted two expressions of interest (EoIs) – from Liberty House Group of the U.K. and Reliance Defence and Engineering Ltd. (RDEL).
While an RDEL spokesperson did not comment on the matter, people familiar with the development said the company has shown interest in an 'asset purchase agreement' for certain "agreed assets" of ABG Shipyard, but it is not interested in buying shares of the lenders or promoters.
Liberty House has offered to take over the existing debt of about Rs 16,000-17,000 crore of the company in lieu of the entire assets of the company, the same sources added. Liberty House could not be reached for a comment.
ABG Shipyard on Wednesday said in a regulatory filing that the lenders have shortlisted a few "prospective bidders" for the company after invoking their rights to change the ownership and its board has authorised a few top officials, including Chairman Rishi Agarwal, to take necessary steps with respect to the proposed transaction.
Besides Agarwal, company's executive director S Muthuswamy and CFO Hasmukh Daftary have also been authorised to "initiate all the necessary steps, deal with, modify, alter, amend, finalise and execute any agreements".
These would be in connection with the lenders and the company identifying and engaging with the prospective bidders for the proposed transaction, the company has said.
In view of the financial challenges faced by the company, the lenders to the company, in meetings of the Joint Lenders Forum, had decided to invoke the rights of the lenders to change the ownership of the company or to acquire assets and liabilities. Lenders had acquired majority stake in the company upon converting part of their debt into equity under SDR scheme.
ICICI Bank had acquired the highest stake in the company (11 percent) in October last year by exercising its option to convert CCPS into equity. The consortium of lenders had also restructured their loan in 2013 under CDR scheme. In August last year, the company's board had also approved the SDR invoked by its lenders. The lenders also include SBI, Dena Bank, PNB and IDBI Bank.
Incorporated in 1985, ABG Shipyard is the flagship company of ABG group with interests in shipping and cement sectors and manufactures ships and rigs across two facilities in Gujarat at Dahej and Surat.
It is one of the three private shipyards in India approved by the Indian Navy to build various types of naval vessels and has built 23 vessels for Indian defence sector.