Lenders stuck as Adani's unconditional bid for JP Associates faces higher, conditional offers
Reuters
Synopsis
Lenders of debt-laden JP Associates are facing a dilemma over Adani Enterprises’ ₹12,600 crore unconditional bid, which is not the highest but offers clarity and assurance. Other bidders like Dalmia Cement, Jindal Power, and Vedanta have submitted higher but conditional offers, primarily tied to unresolved land disputes. Under IBC, lenders can accept an unconditional bid even if it's not the highest.
JP Associates' lenders are in a bind over Adani Enterprises' unconditional bid to take over the company, according to people briefed on the matter.
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For a debt resolution, lenders need to evaluate equally placed bids but other bidders for JP Associates have placed conditional bids, they said.
To be sure, the insolvency and bankruptcy code (IBC) does not prohibit lenders from choosing an unconditional bid in the absence of other such bids. However, as Adani's offer is not the highest, the lenders are confronted with a deadlock, they said. This can only be broken if there is more than one unconditional bid.
Adani Enterprises has made an unconditional bid of Rs 12,600 crore for JP Associates, ET reported on July 8. Its bid is the strongest because the payments are not tied to any unforeseen events the company could face in the future, such as adverse litigation outcomes.
Others such as Dalmia Cement Bharat, Jindal Power and Vedanta have also placed offers to take over debt-ridden JP Associates. Their bids have conditions tied to the resolution of a land dispute, according to sources.
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Most of the bidders have made offers in the range of Rs 12,000 crore to Rs 14,000 crore.
The lenders are likely to seek clarifications from the competing bidders this week about conditions in their bids, as per the people cited earlier.
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If the deadlock is resolved, the lenders are said to be considering a challenge auction where electronic bidding takes place. They may also choose a Swiss challenge method where the highest offer becomes the base price for bidding.
National Asset Reconstruction Company, which represents JP Associates' lenders in the insolvency case, did not respond to emailed queries. Adani Enterprises, Jindal Power, Dalmia Cement Bharat and Vedanta also did not respond to queries.
Resolution plans were submitted for Jaiprakash Associates in the last week of June. The company's creditors have met twice thereafter to review the plans.
