HNG: HNG developer offers Rs 1,380 cr in cash, 10% equity to lenders

Mumbai: The developer of the Mumbai-listed company (HNG) has offered ₹1,380 crore in cash and 10% in shares to lenders as settlement in a last-ditch attempt to exit bankruptcy proceedings, two people have told ET aware of the development.

The company has deposited nearly ₹110 crore with lenders to show its commitment to repaying the loans, the people said. Kolkata-based HNG was admitted to insolvency proceedings at the request of DBS Bank in October last year. HNG did not respond to the request sent by ET.

The promoter, Mukul

, made the settlement offer under Section 12A of the Insolvency and Bankruptcy Code (IBC). This provision gives courts the power to withdraw a claim from insolvency proceedings if 90% of lenders by value agree.



The promoters have partnered with a group to fund the settlement, which involves their contribution of around ₹400 crore and funding of ₹1,000 crore. Edelweiss Asset Reconstruction Company (ARC), which has acquired loans from , and HSBC in the past, owns a 23% stake in HNG’s debt.

“State

, which has the highest exposure of 38%, strongly supports the 12A scheme. A draft report on the audit of the transaction, carried out by BDO India, does not give the company a good word,” said a third person with knowledge of the matter.

In 2019, the promoters offered ₹1,710 crore through a one-time settlement; Last June, he made a revised settlement offer of ₹1,400 crore. Both proposals failed, following which the National Company Law Tribunal (NCLT) admitted the company for resolution of the outstanding debt. The developer was unable to meet the payment deadline in 2019, while last year talks with lenders collapsed after some banks wanted a higher payment.

EY-backed resolution professional Girish Juneja admitted ₹3,338 crore in financial creditor claims. The developer’s offer of ₹1,380 crore will equate to a 41% clawback. If 10% equity and additional ₹550 crore that lenders have appropriated over the past two years are added to the settlement offer, the lenders’ recovery is around 60%.

Last month, the Supreme Court’s decision allowing Sivashankaran to settle loans for Siva Industries encouraged developers to regain control of their businesses by making applications under the appropriate provisions of the law. Siva Industries also settled the case under 12A of the IBC.

HNG has received expressions of interest from

Chemicals, Danish brewer Carlsberg and AGI Greenpac, formerly known as , a manufacturer of sanitary products. Kotak Special Situation Fund and two private equity funds – Oaktree Capital and Cerberus – have also expressed interest. Juneja invited firm offers by July 23.

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