Adani Ports and Special Economic Zone Ltd (APSEZ) is trying to purchase Karaikal port in Puducherry at a valuation of ₹1,500-2,000 crore however a number of sources mentioned that the deal is “not simple” to consummate given the possession construction and the debt.
Marg Ltd, the promoter of the port, holds 45 per cent stake in Karaikal Port Personal Ltd (KPPL).
4 non-public fairness funds – Ascent Capital Advisors India Pvt Ltd, Jacob Ballas Capital India Pvt Ltd, Affirma Capital India and GIP India – collectively maintain 44 per cent stake within the Karaikal Port Pvt Ltd and the steadiness 11 per cent fairness is held by Edelweiss Asset Reconstruction Co Ltd.
The port working firm has a debt of about ₹2,000 crore of which 97 per cent is with Edelweiss ARC after it took over the loans from a consortium of state-run banks.
“The dialogue is now on how they’ll share the enterprise worth of the deal between the fairness and debt holders,” mentioned an individual conversant in the talks.
“The construction seems to be insurmountable; its not simple for APSEZ to accumulate Karaikal port,” mentioned a port advisor.
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APSEZ, he mentioned, has two choices to work out a deal.
First, it may possibly straight cope with Edelweiss ARC for the debt portion and repay the fairness holders.
“However, the price of acquisition will probably be very excessive below this selection,” the advisor mentioned. Given the “weak financials”, Karaikal’s valuation will probably be about ₹1,500 crore, which is lower than the debt of about ₹2,000 crore.
In case the debt holders comply with accept ₹1,500 crore, APSEZ must spend not less than one other ₹500 crore to repay the fairness holders. This may translate into an EBITDA a number of that’s a lot increased than those finalised by APSEZ for buying much better property equivalent to Krishnapatnam and Gangavaram ports.
As such, coping with ARC and fairness holders will probably be a troublesome course of, the advisor mentioned.
The second possibility is for the debt holders to take the port firm to a chapter court docket which is able to permit the customer to jot down off the fairness and pay solely the monetary collectors.
“However, it is a time-consuming course of,” the advisor mentioned.
“We solely have debt on behalf of banks. Fairness with us is a part of restructuring of debt,” R Ok Bansal, Managing Director, Edelweiss ARC mentioned with a suggestion to pose the question on exit to fairness traders.
Mr. B Venkataramanan, CFO and Interim CEO, Karaikal Port, didn’t reply to calls made to his cell searching for remark.
APSEZ didn’t reply to a request for remark.
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Source : The Hindu Business Line