CFM Asset Reconstruction Company Acquires Punjab National Bank's ₹514 Crore Loan to Gammon India
CFM Asset Reconstruction Company has acquired Punjab National Bank's ₹514 crore loan to Gammon India for ₹140 crore. This acquisition gives CFM control over a significant portion of Gammon's legacy non-performing asset, primarily targeting its real estate assets.
Deal Highlights
- Acquisition Price: ₹140 crore
- Original Loan Amount: ₹514 crore
- Percentage of Debt Acquired: 49% of ₹3,800 crore legacy NPA account
- Percentage of Haircut for PNB: 73%
Background
Gammon India, an engineering, procurement and construction (EPC) company, has been struggling with a large debt of ₹3,800 crore. CFM Asset Reconstruction Company has been aggressively acquiring Gammon's debt from various banks, including IDBI Bank and Canara Bank.
What's Next?
CFM is expected to consolidate its position as the largest holder of Gammon's debt and target its real estate assets. The company may also benefit from setting off taxes on losses accumulated by Gammon. A liquidation petition filed by IDBI against Gammon is pending in the Mumbai National Company Law Tribunal (NCLT).
Industry Insights
Recovering debt from EPC companies has been challenging due to their limited real assets and entanglement in litigations with government payments.
Quotes
"Looks like there is no one else who is interested in taking over Gammon's debt," said a person aware of the details. "So one can expect that CFM will likely look to buy more of the debt and consolidate its position as the largest holder of the Gammon debt."