SREI: NCLT Approves NARCL's Rs14,867.50 Crore Resolution Plan for SREI Equipment Finance, SREI Infrastructure Finance
Moneylife Digital Team 25 August 2023
The Kolkata bench of the national company law tribunal (NCLT) has approved the Rs14,867.50 crore resolution plan submitted by state-backed National Asset Reconstruction Company (NARCL) for SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL), which are under the corporate insolvency resolution process (CIRP). This is the first acquisition by the government-owned NARCL. The resolution plan of NARCL was approved in February by the committee of creditors (CoC) of these two companies from the SREI group. 
As part of the approved resolution plan, optionally convertible debentures (OCDs) with a face value of Rs8,000 crore would be issued to approving financial creditors (AFC). The terms of these OCDs, amongst other things, provide for conversion of the OCDs at the option of the holders from the beginning of the sixth year till maturity or eight years from the date of issuance of OCDs.
Further, as part of the approved resolution plan, compulsory convertible preference shares (CCPS) with a face value of up to Rs17,000 crore would be issued to AFCs. The terms of the CCPS, amongst other things, provide for conversion of the CCPS at the end of the tenure or eight years from the date of subscription of CCPS.
Besides NARCL, a consortium consisting of Varde Partners and Arena Investors and Authum Investment & Infrastructure participated in the bidding process for SEFL and SIFL. NARCL offered  Rs5,555 crore in net present value (NPV) terms, including upfront cash of Rs3,180 crore. 
Including cash and a committed amount of more than Rs6,500 crore, NARCL's gross offer was for Rs14,867.50 crore, which was approved by nearly 90% voting shares of the consolidated CoC of SIFL and SEFL. The Rs5,526 crore resolution plan in NPV terms submitted by Authum Investment & Infrastructure received almost 85% votes. Varde Partners and Arena Investors consortium's plan of Rs4,680 crore in NPV terms, including Rs3,250 crore upfront cash, got just 9% votes.
Earlier, the request for proposal (RFP) was changed to resolve a dispute between lenders and the consortium of Varde Partners and Arena Investors about submitting unconditional earnest money deposits (EMDs). The consortium had provided conditional EMDs, which the lenders did not accept. 
In October 2021, the Reserve Bank of India (RBI) took over the management of SIFL, the Kolkata-based non-banking housing finance company (NBFC) due to its deteriorating financial conditions and governance issues. Following this, the company came under CIRP. (Read: NCLT Extends Insolvency Resolution Process for Srei Infra till 5th January)
The bidding process for Srei Infrastructure Finance and Srei Equipment Finance has seen consistent delays, partly due to bidders seeking more time to submit formal bids. 
SEFL, along with its promoter SIFL, is being run by an administrator, which is looking into the day-to-today affairs of the companies since October 2021.
After DHFL, SREI was the second financial services group that was referred by Reserve Bank of India (RBI) for an NCLT-driven resolution process, by superseding the boards of these two SREI companies in October 2021.
In November last year, SEFL reported alleged fraudulent transactions amounting to Rs13,110 crore, during the erstwhile management of the company, run by Hemant Kanoria and Sunil Kanoria.
In the unaudited financial results of the company for the quarter ending 30th September, BDO India LLP, the transaction auditor has pegged the alleged value of the fraudulent transactions at Rs13,110 crore.
Before this, the company had reported fraudulent transactions of around Rs5,100 crore, through two separate disclosures in the stock exchange. (Read: SREI Equipment Finance Auditor Reports Rs13,110 Crore Fraudulent Transactions)
19 hours ago
I too have stopped investing in NCD since no security of even secured NCD, What is SEBI doing as usual sleeping and retail investors have to wait for years to get the principal amount back.
2 days ago
I have stopped investing in any NCD
3 days ago
Thank You Moneylife Digital Team for your info on the SREI COs.
SREI, You have apparently defaulted in redemption. Explain why in non legal language and when can we expect our payments. We do not want your "warm greetings"and your "regards" (your missiles to us senior citizen investors are patently hypocritical.) Give back our investment money with interest.
6 days ago
6 days ago
Please inform anybody received ncd payment
2 weeks ago
I am 66 yr lady want to known the tentative time period of getting my investment in SIFL NCD
3 weeks ago
Srei infra share are not showing in demat account please confirm confirm trading will be continue in future or share of value zero
3 weeks ago
Maybe Up to 5 lakhs small investors ncd get full. Principle amount
Reliance home finance got upto 5 lakhs for ncd
4 weeks ago
Thank God!. When will they start disburments to the debenture holders
4 weeks ago
When time give ncd holders payment?? Full payment in cash or other instruments.. Small investor whats ??
4 weeks ago
Can any one clarify what NCD holder will get, say he hold ncd for amount one lakh.
What he will get now and what probably in future?
4 weeks ago
Everybody including RBI governing authority are corrupted. They will not think for the sr.citizen people like us. We are retired private sector employees and we don't have any pension scheme like their govt organization.
4 weeks ago
I have invested in stei ncds and was getting rs 9700 per annum. What is the fate now.
4 weeks ago
I'm a 75 years old senior citizen, I have invested srei ncd's. I would like to get my payment, please let me know the procedure, and also please let me know when we will payment procedures start.
4 weeks ago
Hope we will get back our hard earned money back which is stucked in all such futile exercise for long time..
Replied to nirvikarpathak comment 4 weeks ago
I hope so
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