India's companies' adjudicator has approved state-controlled gas distributor Gail's acquisition of insolvent private-sector chemical company JBF Petrochemicals.
Several Indian state-controlled and private-sector refiners had bid for JBF, including a joint bid by refiner IOC and upstream firm ONGC. Gail emerged as the successful bidder in October last year after a committee of creditors approved its resolution plan almost unanimously. The approval by National Company Law Tribunal (NCLT) is the final step in Gail's process of acquiring JBF.
It is unclear for now if Gail intends to eventually revive JBF's plan to build and develop a 1.25mn t/yr purified terephthalic acid (PTA) plant at Mangalore in south India's Karnataka state.
JBF had defaulted on bank loans worth around 50bn rupees ($606mn). But a consortium led by private-sector lender IDBI Bank claimed Rs79.18bn from JBF, of which the NCLT admitted Rs56.28bn during its proceedings. But in its 13 March order the adjudicator allowed Gail to pay the creditors Rs20.79bn.
The IDBI-led consortium had granted JBF loans to build and develop the PTA plant, documents on JBF's website show. JBF was to build the project at a cost of $603.81mn, with technology support from BP and 50,000 t/month of feedstock paraxylene from state-controlled chemical producer OMPL.
Secured lenders of JBF, including IDBI, Union Bank of India, Bank of Baroda, Exim Bank and Indian Overseas Bank made a claim of Rs46.84bn, of which the tribunal admitted Rs46.62bn and Gail offered Rs20.15bn, or 43pc of their total claims.
NCLT admitted Rs2.53bn of the Rs13bn sought by unsecured financial creditors of JBF, of which Gail offered to pay Rs144mn, or 5.7pc of the admitted claims. JBF's operational creditors had made claims worth Rs19.05bn, of which the court approved Rs7.13bn and Gail offered to pay 6.9pc of the admitted claims or Rs493mn. The tribunal allowed Gail's offers to all creditors by approving its resolution plan.
The resolution plan would become effective from 13 March, the tribunal said. NCLT also allowed the creditors to pursue their claims independently of the resolution plan.
Gail has existing petrochemical operations in Pata, Uttar Pradesh with a polymers production capacity of 810,000 t/yr. It is aiming to build a propane dehydrogenation plant in Usar, Maharashtra by next year, which will have a nameplate capacity of 500,000 t/yr of polypropylene.
