Government-owned asset reconstruction company, the National Asset Reconstruction Co (NARCL), has offered to acquire around ₹1,100 crore in loans of Parenteral Drugs (India) from the State Bank of India (SBI) and Punjab National Bank (PNB). The offer has triggered a Swiss challenge auction, said two people aware of the development.

NARCL has offered ₹45 crore against a claim of ₹1,173 crore that these two banks have filed with the resolution professional, according to a notice issued by lenders to other ARCs.

Parenteral Drugs was admitted by National Company Law Tribunal (NCLT) for corporate insolvency in February this year.

The principal outstanding loan stands at ₹398.2 crore. The wide difference between the principal outstanding and the claim amount is because the company defaulted on payments in 2016. Thus, the amount lenders filed as claims with the RP includes interest and penalty for the principal loans.

Parenteral Drugs is a contract manufacturer of liquid formulations with two manufacturing units in Madhya Pradesh and Himachal Pradesh. The NARCL offer equates to a recovery of 0.3% on the amount claimed with RP and 11% on principal loans.

The offer made by NARCL is under a 15:85 structure wherein 15% of the consideration will be paid upfront and the balance will be paid in the form of security receipts payable on recovery of the loan. If lenders receive a counteroffer, NARCL will have the right to match it.

SBI has a principal loan of ₹318 crore, while PNB has a principal loan of ₹80 crore. As against this, after adding interest and penalty, SBI and PNB filed claims of ₹879 crore and ₹293 crore, respectively, with the resolution professional.The company entered a one-time settlement with lenders on December 31, 2021, whereby lenders agreed to a settlement amount of ₹154 crore, according to the disclosures made to the stock exchange.

The company paid the first instalment of ₹65 crore to lenders on March 28, 2022. However, the company was unable to arrange for payment of the remaining amount due end of June last year, one of the persons cited above said. This prompted lenders to pursue corporate insolvency for the pharma company.

The company had sold its real estate to repay lenders for the settlement of the loan, it said in a disclosure to the stock exchange.

Any ARC giving a counter bid will have to offer at least ₹2.25 crore higher than the anchor bid of ₹45 crore. Lenders have invited expressions of interest on May 5 and will hold an auction on June 14, according to a notice issued.