TaxTMI 
TaxTMI 
2019 (9) TMI 27
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....spondent No.9 was the Company Secretary of the applicant company, and Respondent No.10 is currently the Chief Financial Officer of the applicant company. The present application has been filed in accordance with the third progress report on the proposed resolution framework with ILFS Group dated 17.12.2018 (initial resolution framework) and the addendum to the initial resolution framework dated 15.1.2019, seeking approval from this Tribunal to conclude the resolution process for the following seven subsidiaries (subsidiaries of IL&FS); i.e. Lalpur Wind Energy Pvt Ltd., Etesian Urja Ltd, Khandke Wind Energy Pvt Ltd, Ratedi Wind Power Pvt Ltd, Wind Urja India Pvt Ltd, Tadas Wind Energy Pvt Ltd and Kaze Energy Ltd. It is further stated that the Specified Wind SPV are the subsidiaries of IL&FS Wind Energy Ltd (IWEL) which holds 51% shareholding in each of the said seven entities. IWEL is a wholly-owned subsidiary of IL&FS Energy Development Co Ltd (IEDCL) which in turn is a subsidiary of the Applicant (91.42% shareholding of the applicant). The balance 49% in each of the Specified SPV's are held by ORIX Corporation (ORIX), a company incorporated under the Laws of Japan. It....
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....re all the Sale Shares and the terms of such sale (collectively the "Offer Terms"). ** ** ** It is further stated that before the New Board was appointed by this Tribunal, ORIX, IWEL, IEDCL executed a Memorandum of Understanding dated 30.3.2018 (First MOU) in respect of the Specified Wind SPVs under which the parties thereto agreed to explore/consider exit strategies from the Specified Wind SPVs and superseded any contrary terms in the SHAs. The relevant clause of MOU is given below below: "i. ORIX, IWEL and IEDCL (Parties)....
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....s made by the applicant group and ORIX in the Specified Wind SPVs from a private bilateral process as per the First MoU and SHAs to a public one. Accordingly, a memorandum of undertaking dated 28.11.2018 (second MOU) was executed by and between ORIX, IEDCL and IWEL in terms of which it was agreed that the process of monetizing the applicant group and ORIX's investments in the Specified Wind SPVs would be modified (from the private bilateral process contemplated in the SHAs read with the First MoU) as follows: i. The Applicant will issue a public advertisement for soliciting Expressions of Interests (EoI) for purchase of its interests in the Specified Wind SPVs. "The parties will proceed to monetize the investments made in each of (i) Wind Urja India Private Limited. (ii) Ratedi Wind Power Private Limited. (iii) Tadas Wind Energy Pvt Ltd. (iv) Lalpur Wind Energy Pvt Ltd. (v) Khandke Wind Energy Pvt Ltd. (vi) Etesian Urja Ltd. and (vii) and Kaze Energy Limited (Collectively referred to "Wind SPVs") in terms of the following process: (a) Infrastructure Leasing and Financial Services Ltd will issue a public Advertisement for soliciting Expression....
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.... the Specified Wind SPVs was offered to prospective bidders. Subsequently, further to the objectives and broad options for Resolution of the Applicant Group set out in the First Progress Report, the applicant submitted the Initial Resolution Framework and the addendum Framework to the petitioner (collectively referred to as the "Resolution Framework", which was filed by the Petitioner before this Tribunal (vide affidavit dated 15.1.2019). The Resolution Framework sets forth that given the position of and challenges in the applicant Group, as set out in the initial Resolution Framework, an "Asset level Resolution"(as defined in the first Progress Report and the Initial Resolution Framework) and in some cases, the sale of a business vertical comprising of a basket of companies and other entities is the most feasible option for resolution of the applicant group. The initial Resolution Framework and the Addendum Framework Resolution contemplate a step by step approach to achieve and "Asset Level Resolution" resolution of the Applicant Group. Summarily, these steps include: (a) Inviting EoIs on the basis of suitable eligibility criteria as may be applicable for the inv....
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....in turn, be utilised to settle dues of the creditors of the Selling Shareholders. (f) Placing the decision of the Creditors' Committee (approval/rejection) before the New Board for consideration and after their approval and if the New Board approves the sale proposal, the same to be placed before Mr Justice D. K. Jain (Retd) appointed by the Hon'ble NCLAT vide order dated 4.2.2019 and 11.2.2019 to supervise the resolution process. (g) After the approval of Justice D.K. Jain (Retd) is received, an application to be filed before this Tribunal to consummate the transaction/resolution framework. The applicant has further stated that the resolution process for Specified Wind SPVs is given below: Sr No. Step as per Resolution Framework Date Details 1. A request for proposal ("RFP") will be issued to the eligible applicants (who meet the criteria set out in the EOI) February 3, 2019 (a) EOIs were received form 26 parties. (b) Twenty-two applicants qualified as per the eligibility criteria. (c) RFP circulated to the Eligible Applicants. 2. Eligible Applicants to be provided with: (i) ....
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....d received was from GAIL ( India) Limited ( "GAIL") on the bid due date (i.e., March18, 2019). As per GAIL's bid, GAIL assumed all the debt of each of the Specified Wind SPVs and additionally attributed a positive equity value for the shares of each of the Specified Wind SPVs. It is pertinent to note that since GAIL's bid attributed a positive equity value for the shares of each of the Specified Wind SPVs without proposing any haircut to the debt of any of the Specified wind SPVs ( which is approx.. INR 3700 Crores), each of the Specified wind SPVs were categorized as Category I companies ( as contemplated under the Resolution Framework Reports). GAIL's bid of approximately INR 4,800 crores for 100% of Enterprise Value contemplated; (i) approximately INR 1064 crores as purchase price for 100% shares of the SPVs; and (ii) approximately INR 3,700 crores towards the aggregate debt of the SPVs, without any hair, cut. Therefore, as per Gail's bid, the value of IWEL's 51% would be INR 542.64 crores (approx). GAIL's bid was placed before the IWEL Board for its consideration and was identified as the Highest Bid. Further, IWEL Board authorised the formation of a ....
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....IEDCL from the relevant Specified Wind SPVs: and iii. an acknowledge that the said amount will be updated to account for the accrued interest on the closing date, and will be payable by ORIX in accordance with the provisions of the share purchase agreement. After that ORIX, vide its letter dated June 28, 2019 and July 5, 2019 confirmed the agreed form of the Share Purchase Agreement (Final SPA), which ORIX would execute with IWEL and the specified wind SPVs to conclude the acquisition of 51 % shareholding in each Specified Wind SPVs by paying the ORIX Revised Bid to IWEL. On July 1,2019 the Applicant issued a letter to Justice (Retd.) D.K. Jain for seeking approval of the sale of 51% (fifty-one per cent) shareholding in each Specified Winds SPV held by IWEL to ORIX and the Resolution of the Specified Winds SPVs. After that, by a letter dated July 15, 2019 Justice (Retd.) D.K. Jain approved sale of the Specified Wind SPVs to ORIX (subject to conditions prescribed therein). The operative part of Justice (Retd.) D.K. Jain's letter dated July 15, 2019 is as follows: " Having regard to the above factual scenario, and bearing in mind the object and sp....
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.... the resolution process of the Specified Wind SPVs with the intent of maximising value for all stakeholders involved. It is further contended by the applicant that the Applicant Group comprises 302 Group Companies (169 Domestic Companies and 133 Offshore Group Companies). The aggregate fund based debt outstanding of the Applicant Group as of October 8, 2018, is approx. INR 94,246 Crores. Of this aggregate fund-based outstanding debt, the outstanding fund based debt of the Specified Wind SPVs is INR 3,700 Crores Given that ORIX has agreed to assume the debt of the Specified Wind SPVs and attributed a positive equity value to the specified wind SPVs, a resolution of the Specified Wind SPVs would be a step towards the resolution of the aggregate outstanding debt of the Applicant Group. While the sale process of the Specified Wind SPVs is at its penultimate lap, whereas the asset sale process for education, funds, domestic road, thermal power, water infrastructure, technology and key international assets is underway. The asset sale process for the Specified Wind SPVs is the First asset sale process which has been placed for this Tribunal's approval as per the Resolution Frame....
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....pproval of GAIL's bid from the Creditors' committee of IWEL, in terms of the Second MOU, GAIL's bid was disclosed to ORIX vide intimation letter dated 18.4.2019. Subsequently, ORIX, by way of its letter dated May 13, 2019, issued to IWEL and IEDCL, confirmed its intention to exercise its right under the Second MoU to acquire 51% of the share capital in each of the Specified Wind SPVs based on the highest bid price ( i.e. GAIL's bid amount of INR 1,064 Crores for 100% of the share capital of each of the specified Wind SPVs) . It is also clear that on June 17, 2019, ORIX issued a letter to IWEL, inter alia setting forth: i. a revision of its offer for the purchase of IWEl's shareholding in the Specified Wind SPVs to INR 592,87,50,000 ( "ORIX Revised Bid"); ii. Confirmation that INR 211,57,85,329 as the total outstanding principal and unpaid interest amount ( net of withholding tax) of promoter debt up to May 31, 2019, which is due to IEDCL from the relevant Specified Wind SPVs: and iii. an acknowledge that the said amount will be updated to account for the accrued interest on the closing date, and will be payable by ORIX in accorda....