NARCL, which recently acquired Simplex Infrastructures’ ₹9,600-crore debt from banks led by Punjab National Bank (PNB), is considering a plan to split the debt into two parts: sustainable and unsustainable. The unsustainable portion could be written off over time, according to sources.
This restructuring plan is still in the early stages but could benefit the company’s stock if approved. Earlier this year, NARCL bought the debt at a 93% discount for ₹640 crore, with part of the payment in cash and the rest in security receipts (SRs). The banks involved in the deal include PNB, State Bank of India, Canara Bank, Bank of Baroda, Bank of India, Union Bank of India, RBL, IDBI Bank, and Standard Chartered Bank.
NARCL is working on a restructuring plan that may involve rescheduling the repayment of around ₹1,000 to ₹1,200 crore of the debt, making it sustainable. The unsustainable portion would be gradually written off over the next five years.
As of late July 2023, over 80% of Simplex Infra’s lenders had transferred their debt to NARCL, which has appointed India Debt Resolution Company (IDRCL) to manage and resolve this debt. Simplex Infra is also working to improve its financial situation through asset realisation and settling arbitration claims.
The company, owned by the Mundhra family of Kolkata, is involved in civil construction projects across several countries. In May 2023, the Kolkata bench of the National Company Law Tribunal (NCLT) dismissed an insolvency application against Simplex Infrastructures by the Central Bank of India, calling it a “temporary insolvency” due to financial issues, despite a strong business model. The tribunal noted that Simplex is owed ₹554 crore from government agencies, which could help repay its debts.
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