SBI: SBI sells Rs 3,815 crore KSK Mahanadi loan to Aditya Birla ARC

The bank said Aditya Birla ARC’s bid of ₹1,544 crore was the highest at an auction held on Monday, they said.

This will be the largest sale of distressed loans based on an upfront payment by a bank, which equates to a 40% recovery. Until now, most big-ticket distressed loan sales have been structured deals involving partial payment in the form of security receipts that would be refunded upon collection from defaulting borrowers.

Aditya Birla ARC’s bid was backed by its joint venture partner, Varde Partners, the sources said.

“The bank has fully funded this loan, which will be reflected in the recovery and profit figures,” said a bank official who did not wish to be named.

SBI and Aditya Birla ARC did not respond to ET’s request for comment.

SBI’s decision to exit the power company comes as the government asked lenders to help struggling power producers improve their output.

Upon acquisition of SBI loans, Aditya Birla ARC would take control of 34% of KSK Mahanadi Power loans, a critical level required under the Insolvency and Bankruptcy Code (IBC). A resolution would not be approved if 34% of lenders vote against it.

ARC’s 34% loan share would include 18% it would earn when acquiring SBI loans and 16% it already has on its books after purchasing loans from SBI.

and over the past two years.

“The timing of SBI’s proposed sale of the KSK Mahanadi loan indicates that lenders are no longer confident of a speedy resolution under the IBC-led process,” a lender said.

KSK Mahanadi Power has been in insolvency proceedings for more than two and a half years. Resolution professional Sumit Binani, backed by PricewaterhouseCoopers, has extended the deadline for submitting a binding offer for the company to July 8 from April 29. The PR received ₹29,501 crore in claims from financial creditors.