Last week, the group was asked for a ₹10 crore guarantee to initiate the sale process. But it has asked for time till May 6, citing unavailability of directors. Lenders, though, are hopeful to complete the transaction by the end of May.
“Lenders had asked Malpani to submit its provisional letter of intent together with a ₹10 crore guarantee within two days in a letter on April 21. In reply to this letter, Malpani wrote to lenders saying they cannot go ahead within the stipulated time as some directors are unavailable. They have asked for time till May 6,” said a person aware of the communication.
The Malpani Group did not reply to an email seeking comment.
The Ahmednagar-based Malpani Group was the only bidder for debt-laden Imagicaaworld which owes lenders a minimum of ₹1,417 crore. The Malpani Group has interests ranging from theme parks to green energy to FMCG and real estate in Maharashtra.
According to the terms agreed to by lenders, Malpani’s offer totals ₹575 crore, ET reported last month. Under the proposed deal, the Malpani Group would get a 70% stake valued at ₹500 crore in Imagicaaworld, and lenders will hold a 13% stake, worth ₹75 crore. This constitutes a 59% haircut for lenders, led by the Union Bank of India.
The structure of the so-called one-time settlement deal envisages two simultaneous transactions through which Aditya Birla ARC will purchase the debt from banks and transfer it to the Malpani Group, which will take an equity stake in the company.
Creditors have decided that getting an ARC in the middle will be quicker as banks will not have to seek regulatory approvals or launch an open offer according to Sebi rules. It also reduces the chances of any litigation by Shetty in the future.
Union Bank of India is the largest creditor to the company with a principal loan of ₹323 crore, followed by Bank of Baroda at ₹237 crore.
Imagicaa owns multiple theme parks around Mumbai and Pune. Shetty owns 31% of it directly and indirectly. It has been facing financial pressures due to rising costs in the last couple of years. These pressures have been compounded due to the Covid pandemic, which shut down theme parks across the world.
The company’s stock price has doubled since the deal was first reported by ET in October 2021, touching a 52-week high of ₹18.63 earlier this month. It ended Friday 5% higher at ₹17.57 on the BSE.
Lenders are hopeful that the sharp run-up in share prices will not impact the deal. “Malpani has just asked for a few days’ time. We do not see many challenges and are still confident of completing this before the end of May. But yes, because of the delays, the buyer may lose some business potential as both the school vacation in May and also the rainy season after that are two big windows for entertainment parks in Mumbai and Pune,” said a second person involved in the negotiations.
Lenders may also have to call for a second round of bidding to challenge the single bid they have, according to the normal process which could delay the closure of the deal.