Canara Bank-led consortium sells Rs 520-cr debt of Karanja Terminal to Prudent ARC

A consortium of lenders led by Canara Bank has sold the ₹520 crore debt of Karanja Terminal and Logistics Pvt Ltd (KTPL) to Prudent ARC, recovering over 86% of total dues through an all-cash transaction.

The sale was executed through a Swiss challenge auction, marking one of the few instances where lenders used a transparent price discovery process before approving a one-time settlement (OTS) proposal from the borrower. KTPL, which operates a port and logistics facility in Raigad district, Maharashtra, had an outstanding debt of about ₹600 crore.

The lenders initially set a base price of ₹428 crore to gauge market interest before considering the promoter group’s OTS offer of ₹475 crore. While multiple asset reconstruction companies (ARCs) had expressed preliminary interest, no counterbids were received during the auction. Consequently, Prudent ARC’s binding ₹520 crore all-cash offer emerged as the winning bid — about ₹100 crore higher than both the base and promoter offers.

According to a person familiar with the matter, “This transaction demonstrates how a transparent price discovery mechanism can materially enhance lenders’ recovery compared to direct OTS deals.” The bid is supported by institutional co-investors participating alongside Prudent ARC, people aware of the deal said. BOB Capital acted as the process advisor for the transaction.

The sale, however, remains subject to judicial review, as KTPL’s promoters have challenged the proposed debt assignment to the ARC in court. The matter is sub judice, with the next hearing expected soon.

KTPL was declared a non-performing asset (NPA) following repayment delays. The company is a special purpose vehicle (SPV) of Mercantile Ports and Logistics Ltd, established to develop an all-weather port and logistics hub at Karanja Creek in Chanje village.

Earlier, promoters led by Nikhil Gandhi had offered ₹472 crore as part of an OTS proposal against KTPL’s ₹590 crore debt, following an initial offer of about ₹430 crore. The Swiss challenge process, however, helped lenders achieve significantly higher recovery through Prudent ARC’s winning bid.

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