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Union Bank takes second shot at selling KSK Mahanadi loan account

January 30, 2023

Union Bank takes second shot at selling KSK Mahanadi loan account
Union Bank of India (UBI) has put its ₹2,077 crore loan to KSK Mahanadi Power on sale for the second time in less than six months, after the unsuccessful attempt in August last year.

The bank has set a ₹828 crore reserve price to sell the account, a 10% reduction from the ₹919 crore reserve price set by the bank in August. It envisages a recovery of 40% on the account, down from the 44% recovery expected last time, according to a note seen by ET.

The bank has also put its ₹54 crore exposure to KSK Mahanadi Power’s affiliate company Raigarh Champa Rail, which manages the infrastructure to supply raw material to the plant, on the block at a reserve price of ₹38 crore.

UBI is the second largest creditor to KSK Mahanadi Power, which owns a 3,600 MW coal-based power plant in Chhattisgarh. Other large lenders, including State Bank of India (SBI), Punjab National Bank, Bank of Baroda (BoB) and Axis Bank, have already sold their debt in the company.

“The bank has reduced its reserve price and expects it to go through this time. Initial discussions with prospective buyers have been good,” said a person familiar with the process, who did not wish to be identified.

The note showed that buyers have time till February 6 to complete due diligence on the account. The auction is slated for February 7. The bank will conduct a Swiss auction on February 15 in case it receives a single bid.

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