Nagarjuna Fertilizers looking to settle ACRE debt via slump sale
Nagarjuna Fertilizers and Chemicals has sought shareholders' approval to sell its urea manufacturing plant and micro irrigation business to a Greenko-linked entity in a slump sale for ₹1,700 crore.
The proceeds will be used to settle loans of its new lender, Assets Care and Reconstruction Enterprises (ACRE), an asset reconstruction company. SSG-Ares backed ACRE acquired Nagarjuna Fertilizers' entire ₹1,500 crore debt from banks by paying ₹811 crore, as reported by ET on March 29.
Nagarjuna Fertilizers entered into an agreement with ACRE to settle its ₹1,500 crore debt, which it will pay from proceeds of slump sale, according to the disclosures made by the company in its annual report released on August 22.
In effect, ACRE paid ₹811 crore to banks in March and is set to recover ₹1,500 crore from Nagarjuna.
The company itself will earn ₹1,700 crore from the slump sale to AM Green Ammonia (India), a company incorporated by the promoters of Greenko Group, it informed the stock exchange.
In March, IDBI Bank, State Bank of India, ICICI Bank, Punjab National Bank, UCO Bank, Bank of India, and Indian Overseas Bank sold ₹1,500 crore debt for ₹811 crore at an uncontested Swiss auction, equating to 54% recovery for lenders.
The company disclosed to exchanges that ₹1,700 crore from the slump sale involved ₹1,365 crore cash consideration to be received by March 2024 and the balance of ₹335 crore in the form of 19.7% equity allotment in AM Green Ammonia. Within one year, the purchaser will have the right to acquire a 19.7% stake for ₹335 crore at a 12% premium payable annually from Nagarjuna Fertilizers.
On settlement with ACRE, Nagarjuna said that ₹1,200 crore would be paid upfront to lenders from proceeds of slump sale and the
