JC Flowers ARC emerges as highest bidder for Sathavahana Ispat debt

Hyderabad-based Sathavahana is primarily engaged in the manufacturing of ductile iron pipes and crude iron

Hyderabad: JC Flowers Asset Reconstruction (ARC) has emerged as the highest bidder for acquiring the debt of Hyderabad-based Sathavahana Ispat at Rs 410 crore.

The lenders’ consortium, which called for a bid for sale of the debt of Sathavahana Ispat, selected JC Flowers ARC as the highest bidder. The Hyderabad firm owes over Rs 1,000-crore debt to the consortium of four lenders, led by Canara Bank. The debt has been classified as a non-performing asset (NPA) in the books of the lenders for more than three years.

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Sathavahana Ispat is engaged in the manufacturing of ductile iron pipes and crude iron. The company also has a metallurgical coke plant and is listed on both BSE and NSE. Lenders are trying to maximise the recovery for themselves by taking advantage of the recent surge in steel prices, which are currently at an all-time high.

The lenders’ consortium has evaluated the merits of four bids they received and selected JC Flowers Asset Reconstruction as the H1 bidder. The other three bids were from Maximus ARC which offered Rs 380 crore, CFM ARC which offered Rs 370 crore and Welspun which offered Rs 360 crore.

As next steps and in accordance with due process, it has proposed to now run a Swiss Challenge process to maximise value (optimise the offer and discover better price for the lenders). A Swiss Challenge System is a bidding process designed to elicit private sector initiative in core sector projects. It’s an offer made by the original proponent to the government ensuring his process to be best in terms of effectiveness including both the factors cost and time.