Welspun’s offer for ABG Shipyard among the highest for liquidation assets

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Even as concerned parties seek clarification on the Enforcement Directorate (ED) tying up the assets of troubled borrower ABG Shipyard, Welspun Corp Limited’s winning bid of Rs 659 crore has raised hopes of the liquidation process under the Insolvency and Bankruptcy Code (IBC).

According to sources from the National Company Law Court (NCLT) Ahmedabad and the legal fraternity, the winning bid from Welspun Corp Ltd is one of the highest among assets in liquidation.

“While clarification is sought regarding ED tying up the assets of ABG Shipyard, the winning bid bodes well for creditors even in the liquidation process as it is one of the highest” , said a source on condition of anonymity.

According to Gujarat government officials, the development also bodes well for ports and the state’s shipbuilding sector. “Under the new policy of 2019, the state government has tried to energize the sector by looking for ways to attract domestic and international companies. With this sale of assets, operations will not take a hit. and could potentially help achieve the goals set under the policy,” a senior government official said.

ABG Shipyard had gone into liquidation after no buyer was found during the insolvency process after RBI ordered its creditors to refer to NCLT for the resolution process. ABG Shipyard’s liquidator had recently issued a tender for the sale of specified assets following a Supreme Court (SC) order dated August 26, 2022 to complete such a sale within four weeks.

Spread over 165 acres of leasehold land with 1,000 meters of water frontage, the distressed borrower’s assets were successfully offered by Welspun Corp and its wholly-owned subsidiary Nauyaan Shipyard Private Limited, which is used as special purpose vehicle for organic or inorganic growth in the marine field.

After paying Rs 589 crore through Welspun Corp Limited and Rs 70 crore through subsidiary Nauyaan Shipyard, the former is now looking to unlock the potential of the ABG Shipyard asset. Welspun’s proposal involved using ABG Shipyard’s facilities for defense, commercial shipbuilding, green steel, shipbreaking and ship repair, among others.

Among the key facilities, the Dahej yard includes the largest ship lifting system in the world with a capacity of 33,000 MT and a partially completed ship transfer system with a fluidized bed with a capacity of 27,000 MT.

However, in its filing with the exchanges on Thursday, Welspun Corp said that partially built obsolete ships and scrap acquired under the winning bid are estimated at more than 150,000 metric tons. “It is estimated that its potential value would be unlocked within 12 to 15 months of the completion of the acquisition,” he said.

In addition, Welspun Corp said it would take “appropriate action” even as the IBC grants immunity to assets sold in liquidation by prohibiting investigative agencies from seizing or confiscating them. A query emailed to Welspun Corp went unanswered at the time of writing.

On its part, the ED had seized several assets including shipyards, land, commercial properties and bank deposits amounting to more than Rs 2,700 crore, following allegations of bank loan fraud against the promoters.

Earlier on Tuesday, ABG shipyard developer Rishi Agarwal was arrested by the Central Bureau of Investigation (CBI) on the basis of money laundering allegations with claims of Rs 22,059 crore made by several creditors.

Agarwal’s arrest follows a complaint filed by the State Bank of India (SBI) whose portfolio of outstanding loans to ABG Shipyard stands at Rs 2,400 crore.

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