Lenders may put up Manmohan Shetty’s Imagicaaworld for auction this month

Malpani Group’s sweetened offer includes ₹500 crore in upfront payments and 15% stake to the lenders upon conversion of ₹75 crore of debt into equity, sources aware of the deal terms said.

The Malpani Group did not respond to ET’s queries.

It had earlier offered ₹500 crore, as reported first by ET on October 15. BoB Capital Markets, the lenders’ process advisor, will invite offers from other applicants under a Swiss challenge auction with Malpani’s bid as an anchor offer.

Imagicaaworld, earlier known as Adlabs Entertainment, has total debt of ₹1,417 crore as of March 31, 2021. The offer of ₹575 crore would equate to a recovery of 40% for lenders. But if the equity offer is excluded, the offer equates to a recovery of 35%.

Malpani had sweetened the offer to ₹575 crore in January itself but some lenders, including Canara Bank, were seeking the entire ₹575 crore in upfront payments.

Last week, all lenders including Canara Bank gave their consent for the revised structure, said one of the persons cited above. Malpani Group is in talks with a few asset reconstruction companies to participate in the Swiss auction, this person said.

An out-of-court resolution of Imagicaaworld has been in the works for the last three years. In 2019, Union Bank of India rejected the promoter Shetty’s ₹575-crore one-time settlement offer on expectations of higher bids, said the people cited above.

In May 2021, Dream Media Works had given an unsolicited offer of ₹725 crore. That offer had prompted lenders to restart an out-of-court resolution process of the theme park-cum-entertainment company, the second and the third persons said. However, negotiations with Dream Media did not progress since it failed to make an earnest money deposit with lenders, they said.

Union Bank of India, which is the lead bank, has the highest outstanding loan of ₹429 crore followed by Bank of Baroda at ₹320 crore, the bid document issued by Bob Caps showed.

Other lenders are Canara Bank, Bank of India, Central Bank of India, J&K Bank, Indian Overseas Bank, Life Insurance Corporation of India and Assets Care & Reconstruction Company, an ARC backed by Ares SSG Capital.