US-based hedge fund Deccan Value Investors LP has received court approval to buy bankrupt auto component maker Amtek Auto Ltd for around Rs 2,700 crore ($359 million at current exchange rates).
The Chandigarh bench of the National Company Law Tribunal (NCLT) approved the resolution plan submitted by Deccan Value for Amtek earlier this week, the company said in a stock-exchange filing.
Amtek’s Committee of Creditors, led by IDBI Bank, had cleared the plan in February with a 66% voting share. The resolution plan would result in a haircut of around 80% for the lenders.
The NCLT said that Deccan Value, which had earlier deposited half of the performance bank guarantee of Rs 300 crore earlier, must submit the remaining amount and seek approval of the Competition Commission of India within 15 days. Amtek Auto’s equity shares will be delisted from the stock exchanges, the NCLT said in its order.
The insolvent firm’s dues to its creditors stood at Rs 12,700 crore. Deccan Value will pay Amtek’s creditors an upfront cash payment of around Rs 450 crore. It would pay the balance amount through future receivables that assume recovery from tax refunds, sale of non-core real estate and other assets of the company.
Deccan Value has also offered Rs 300 crore from optionally convertible debentures payable over seven years.
Amtek’s resolution professional, Dinkar T Venkatsubramanian, did not respond to queries on details of the plan.
This is the second offer by Deccan Value; it had in July 2018 submitted a bid of Rs 3,150 crore but later backtracked.
However, the resolution plan is higher than the liquidation value, which was Rs 1,800-1,900 crore as of February this year. In 2018, the New Delhi-based firm’s liquidation value was determined at Rs 4,119 crore.
Separately, three of Amtek group companies – Castex Technologies, Amtek Ring Gears Ltd and Metalyst Forgings – had been undergoing insolvency resolution processes. A resolution plan submitted by SSG Capital Management to acquire Amtek Ring Gears was approved by the NCLT in December 2019, as per the company’s website.
Amtek Auto was among the first 12 companies that the Reserve Bank of India had directed banks to take to bankruptcy courts in 2017.
The company was dragged to the NLCT by Corporation Bank, which is now part of Union Bank of India.
Amtek was almost driven into liquidation last year after UK-based metals tycoon Sanjeev Gupta-led Liberty House presented a Rs 4,025 crore resolution plan but subsequently failed to honour its commitment.
However, the Supreme Court stayed liquidation proceedings in September last year, just months after the company’s lenders started a fresh bidding process.