NCLT approves Swan Energy’s Rs 2,108 crore resolution plan for Reliance Naval and Engineering
The National Company Law Tribunal (NCLT) has approved the resolution plan of Swan Energy and Hazel Mercantile Limited (HML) to acquire Reliance Naval and Engineering Ltd, the latter said in an exchange filing.
Swan Energy Limited (SEL) is a strategic partner with HML through a special purpose vehicle — Hazel Infra Limited (HIL).
According to the resolution plan, Swan Energy will pay the creditors of Reliance Naval and Engineering Ltd an amount of Rs. 2108 crore including the CIRP cost of Rs. 65.31 crore. The creditors of Reliance Naval and Engineering Ltd had submitted total claims of Rs 46,441 crore, of which the resolution professional had submitted only Rs 12,884 crore. The average liquidation value of Reliance Naval and Engineering was arrived at Rs 1,352 crore.
Secured creditors, who had submitted claims of over Rs 11,800 crore, would receive Rs 2,040 crore. Unsecured creditors, who had filed claims of Rs 31,860 crore, receives nothing under the resolution plan. Operational creditors, including the workmen and employees, who has together filed claims for Rs 2,663 crore, receives only Rs 3 crore.
As per the plan, the Hazel Infra Ltd. which is acting as SPV of Resolution Applicant Hazel Mercantile Ltd. and its strategic investor Swan Energy Ltd in the ratio of 26:74 shares, will be taking over the Corporate Debtor.
Resolution Plan
| Category of creditors | Claims Filed (Rs cr) | Admitted Claims | Provided for in the resolution plan (Rs cr) |
| Secured Financial creditors | 11,917 | 11,858 | 2040 |
| Unsecured Creditors | 31,860 | 654 | 0 |
| Operational Creditors | 2,663 | 371 | 3 |
| Other debts and dues | 0 | 0 | 0.65 |
| Grand Total | 40,441 | 12,884 | 2,044 |
Apart from raising Rs 1,808 crore from operations of Reliance Naval and Engineering, the new promoters will infuse Rs 600 crore and borrow another Rs 550 crore. The surplus amount after paying for creditors and CIRP cost will be used for working capital and Capex.
It is further submitted by the successful bidders that the resolution plan which clearly states that the successful Resolution Applicant shall ensure that payment is made to the stakeholders even if the internal accruals fall short of the targets.
Sources of Fund
| Sources of fund | Amount (Rs cr) |
| Promoters | 600 |
| Loans | 550 |
| From operations of corporate debtor | 1,808 |
| Total | 2,958 |
The Resolution Plan provides for the cancelation and extinguishment of all presently outstanding ordinary equity shares being held by the existing shareholders, subject to issuance of one fresh equity share of face value of Rs. 10 for every 275 ordinary equity shares held by existing shareholder. Thus, 73,75,91,263 existing equity shares of face value of Rs. 10 each will become 26,82,150 ordinary equity shares of Rs. 10 each. It is also provided that the Special Purpose Vehicle (SPV) — Hazel Infra Limited – will take over the Corporate Debtor and this SPV shall subscribe to 5,00,00,000 fresh ordinary equity shares of face value of Rs. 10 each.
Thus, once the share capital of the Corporate Debtor is reorganised, the SPV will hold 94.91% while the public shareholding will be 5.09%.
Also see: A2Z Infra Engineering goes for one-time settlement of Rs 134 cr dues to IDBI Bank
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