NEW DELHI: The board of debt-ridden Nagarjuna Fertilizers and Chemicals Ltd. (NFCL) in a meeting held on Sunday, authorized the company to engage with Asset Care and Reconstruction Enterprise Limited (ACRE) on a potential One-Time Settlement (OTS) under the SARFAESI framework, directly, or through a combination of both approaches.
This parallel track aims to achieve an amicable resolution alongside the ongoing efforts to facilitate the planned slump sale. “NFCL remains committed to working towards a sustainable debt resolution plan,” the company said.
“We are actively engaged with ACRE and optimistic about fulfilling the critical conditions for the slump sale transaction. The additional OTS exploration under SARFAESI reflects our proactive approach to ensure a comprehensive and timely resolution for all stakeholders,” the company added in an exchange filing on Sunday.
The board in its earlier meeting in September had approved the slump sale of Ammonia/Urea and MI businesses with related assets and liabilities (subject to meeting certain conditions), sale of non-core assets and OTS as debt resolution with ACRE with the funds raised from slump sale and sale of non-core assets was subject to fulfillment of CPs, approval of Lender/ACRE and other applicable approvals and clearances, the company added.
However, ACRE deems the current settlement proposal “tentative” and not binding upon the successful completion of the aforementioned conditions. This effectively puts the debt resolution plan on hold for now. Meanwhile, ACRE continues its pursuit of alternative debt recovery measures under the SARFAESI Act.
In May 2023, the agency issued a notice and subsequently took symbolic possession of NFCL’s scheduled assets in October. NFCL proposes a one-time settlement of R1,500 crore with asset reconstruction company ACRE. According to the annual report of the company, out of the R1,500 crore, the company plans to raise R1200 crore through slump sale proceeds, and the balance of R300 crore from the proceeds of sale of non-core assets to the extent required and approved by lenders and/or or from receipts in case of exercise of call option for 19.7 % equity owned by NFCL in AM Green Ammonia (India) Private Limited from the Slump sale transaction.
The company also plans to use the balance cash/non-core assets towards running the company, settlement of remaining creditors, tax liabilities, future business plans, etc.