Prudent ARC, US-based fund join the race for Punj Lloyd

NEW DELHI: Prudent ARC and a US-based fund have submitted bids for Punj Lloyd, setting up a contest for the takeover of the financially stressed construction company whose founder Atul Punj offered a settlement to bankers last month to reclaim the company from them, according to several people aware of the matter.

The two new contenders are yet to clear legal scrutiny for conformity with the bidding guidelines, according to the people. Bankers are said to be evaluating all three proposals.

The bids from Prudent ARC and the US-based fund are said to include some upfront payments and staggered repayments of outstanding dues worth ₹13,000 crore. The US-based fund is said to be backed by a group of engineering companies.


Prudent ARC had not responded to ET’s queries as of press time.

Prudent ARC was also amongst contenders for bankrupt Jet Airways but was eventually disqualified as it did not meet criteria for minimum net worth required for potential investors in the airline.

The two new contenders were not part of the initial list of 13 applicants who submitted expressions of interest to participate in the bidding process for Punj Lloyd after it was admitted for insolvency proceedings by the National Company Law Tribunal (NCLT) in March last year.

Vedanta group arm Sterlite and Welspun were in the initial list of contenders.

Punj Lloyd was dragged to NCLT after the company failed to honour repayments on a ₹800 crore loan taken from ICICI Bank. Once a company is admitted by NCLT under insolvency regulations, the existing board is suspended and a committee of creditors is formed that appoints a resolution professional to run the company on their behalf.

Punj Lloyd’s resolution professional Ashwini Mehra sought a 60-day extension from NCLT last month to extend the bidding process for the company after no formal bids were received at the close of the previous deadline.

Atul Punj subsequently offered a settlement to the banks.

If Punj’s offer is selected, it would require banks to file an application to withdraw insolvency proceedings against the company as his bid cannot be considered under present insolvency regulations that forbid founders and their relatives from acquiring their own companies.

Resolutions for construction companies have been hard to come by under the bankruptcy framework as these companies have few assets, according to industry experts.

Most of the companies undergoing IBC proceedings have not been able to finalise a buyer either because banks have found financial offers to be too low or bidders have lost interest due to delays caused by the lengthy legal process.