Swiss Challenge 1 SBI, CAG, Hyderabad

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1 SWISS CHALLENGE Invitation for better offer (Swiss Challenge) for taking over an EPC Company engaged in providing turnkey solutions for Infrastructure sector and acquiring 30% stake in the residual entity - Two Binding Offers on hand State Bank of India ( SBI ), on behalf of itself and the other consortium lenders (including various banks and financial institutions) that had extended certain working capital and term loan facilities to a public limited closely held company ( Company ) for operating its Engineering, Procurement and Construction ( EPC ) business (more importantly in Tunnel Boring, Border fencing and irrigation) spread across India, proposes to undertake change in ownership of the Company in accordance with the Strategic Debt Restructuring Scheme (SDR) of RBI dated June 8, 2015 amended from time to time. 2. The current outstanding amount of the Company, against such loans, as on September 30, 2016 is Rs Crore (including interest overdue) and the Company is currently under financial distress. As it is difficult to sell company as a whole, we propose to demerge company into EPC company for sale of EPC company and divest 30% equity held in Residual Company. Accordingly, we were scouting for suitable buyers / investors for both the entities. 3. Lenders had already received two different Binding Offers from two interested investors for buying EPC company and for acquiring 30% equity in residual company the contours of which are placed as Annexure 1. The binding offers qualify as per the requirements of the lenders under SDR. One of the Binding offers is for acquiring 100% stake in a proposed to be fully owned subsidiary of the Company hereinafter referred to as EPC Co. This shall contain all the running projects of the existing company pertaining to identified business verticals (viz., TBM, North East, Irrigation, Electricals and Thermal projects). The other Binding offer is for acquiring 30% of equity shareholding in the Company post carve out of the subsidiary, hereinafter referred to as Residual Company which will contain Hydro business, stalled projects and claims receivables under various claims which are filed and under arbitration. 4. SBI had earlier invited Expressions of Interest (EoI) from interested parties who fulfill qualification criteria and who may be willing to acquire a minimum of 51% (fifty one percent) equity shareholding and management control in the Company. 5. Now, we present a SWISS CHALLENGE to public in general and interested parties in particular who fulfill qualification criteria and who may be willing to come forward with a better offer. The bids submitted by the interested parties should have qualified as per the requirements of the lenders as per SDR and should be better than the contours of the binding offers already received by the lenders. The Monitoring Committee of Lenders lead by SBI will be the final decision making authority to accept or reject the offers depending on the comparative strength of the offer. Swiss Challenge 1 SBI, CAG, Hyderabad

2 6. In case anyone comes with a better offer, First Right of Refusal will be given to the persons in respect of the offers already on hand, provided they are willing to improve the offer to match the latest one received under Swiss Challenge. In case they are not willing to improve their original offer, then only the person who had submitted the latest offer (under Swiss Challenge) will be considered, if otherwise in order. 7. For details regarding qualification criteria and other information, please refer to Annexure Interested parties may submit their Expression of Interest under this Swiss Challenge with an improved offer latest within 21 days ie., by 19 th December, 2016, IST by hand delivering/courier it to AGM & RM, AMT-I, SBI CAG, 2 nd Floor, Ozone Commercial Complex, Panjagutta, Hyderabad by which time this opportunity gets closed. Any offer submitted after the above timeline will not be considered as valid. 9. For any clarifications, please contact AGM &RM, AMT-I, SBI CAG, 2 nd Floor, Ozone Commercial Complex, Panjagutta, Hyderabad Ph: Note: SBI reserves the right to cancel or modify the process without assigning any reason and without any liability. This is not an offer document. Applicants should regularly visit the SBI website at to keep themselves updated regarding clarifications/ amendments/ timeextensions, if any. Swiss Challenge 2 SBI, CAG, Hyderabad

3 ANNEXURE -1 A. Sale of Identified Business Verticals (viz., TBM, North East, Irrigation, Electricals and Thermal projects) by carving out into an SPV as 100% subsidiary of Company ( EPC Co. ) to ( Identified Investor ), moving a debt of Rs 3005 cr. (FB Rs 2175 cr. and NFB Rs 830 cr.) Based on the binding offer, the order book (Rs crore consisting of moving order book of Rs crore and stalled order book of Rs crore), assets and liabilities of the Identified businesses along with the respective Pre-qualifications (PQ) will be transferred to EPC Co. The break up of debt movement of Rs Cr is as under: Facility in cr. Term Loan Cash Credit OCPS / CRPS (by converting FB O/s) Fund Based Total Present BG o/s in the projects under Identified business segments Total Debt Contours of Carve out / Binding offer of EPC company: Tranche I II III IV The investor will invest Rs. 50 cr. in EPC Co. in tranches in the following manner: Investment Rs 5 cr. within 10 working days upon communicating the in principle approval by the majority of the lenders in a JLF. Rs 5 cr. within 30 working days from the date of completion of slump sale to buy out 100% of the paid up share capital held in the Target Company. Rs 15 cr. within 30 working days from the date of completion of slump sale agreement towards need based working capital for the Target company. Rs 25 cr. within 30 working days from the date of completion of court approved demerger process towards need based working capital for the Target company. Upon execution of BTA, as per the Binding offer, Identified investor shall attain 100% control in EPC Company by way of purchase of shares from the company and give exit to lenders as shareholders under SDR for the portion of business carved out in EPC Company. The debt of the EPC company as per the Binding offer is proposed to be refinanced / reassessed (CC) as per the following terms: I. Term Loan: Rs. 440 crore Swiss Challenge 3 SBI, CAG, Hyderabad

4 II. III. Cash Credit: OCPS/ CRPS: Rs. 435 crore Rs crore (Fund based outstanding of Rs 1300 cr. shall be carved out and converted to OCPS/ CRPS.) IV. Bank Guarantee: Enhancement Personal Guarantee from new Investor: Rs. 830 crore (outstanding for existing projects carved out to EPC Co.) Rs. 782 crore (assessment furnished below) The new investor has offered to provide personal guarantee for the entire exposure. B. Divestment of equity to the tune of 30% in the Residual Company to ( Potential Investor ), (Residual debt of Rs 2852 cr. (FB cr. and NFB- Rs. 182 cr.) The (Residual company) business will consist of Hydro business consisting of the order book (Rs. 934 cr. consisting of moving order book of Rs. 413 cr. and stalled order book of Rs. 521 cr.) assets and liabilities along with the respective Pre-qualifications (PQ). The BG outstanding (Rs. 182 cr. as on Mar 31, 2016) pertaining to the Hydro business and closed projects will also remain in residual company. As per the terms of Binding Offer, the Potential Investor shall not be held liable for the existing restructured residual debt in the company. However, the Potential Investor will ensure that the company from its operations (mainly Hydro Division) will service the restructured debt. [We propose to continue to have the Personal guarantee of existing promoter until the loan facilities are paid off in Residual Company] The proposed treatment of residual debt available in the Residual Company is as under: Facility ($) (Rs in Cr.) (I) Cash Credit (II) OCPS/ CRPS (by converting FB O/s) ($) (III) OCD (by converting entire residual FB O/s incl. over dues)** Total Debt ($) Facilities (I)&(II) above are to be serviced based on operational cash flow from Hydro business. Redemption of item (III) is detailed in next page under OCD. **Estimated FB outstanding as on Sep 30, 2016 post carve out of debt in EPC Co. Any delay in implementation of the scheme is likely to further increase the balance debt. Swiss Challenge 4 SBI, CAG, Hyderabad

5 Terms of treatment of debt in the Residual company: I. Cash Credit: II. OCPS/ CRPS: OCDs: Rs. 50 crore Rs. 100 crore (Fund based outstanding of Rs 100 cr. shall be converted to OCPS / CRPS.) Rs cr. (Entire residual debt including over dues as on date of conversion shall be converted to OCPS / OCD.) OCD (by converting entire FB O/s including over dues) is expected to be repaid out of receipts of non-core assets break up of which is as under: III. (Rs in cr.) Particulars Value as per books (*) Claims Refund against invoked BG Investments Sale of Collateral security Total Realization (*)Independently Validated by EY. (**) actual realizable quantum of claims and timing of the realization same may be difficult to ascertain. Bank Guarantee: Rs. 182 crore (outstanding for projects of Hydro business and closed projects in Residual Company) Swiss Challenge 5 SBI, CAG, Hyderabad

6 ANNEXURE CRITERIA FOR QUALIFICATION 1.1 Eligibility and Qualifying Criteria Financial Proposals of only those interested parties who meet the qualifying criteria (business and financial) specified in subsequent sections in this terms of expression of interest will be considered. Bids under Swiss Challenge which do not meet these criteria shall be rejected. The interested party s competence and capability is proposed to be established by the following parameters: a. Business Capacity; and b. Financial Capacity 1.2 Business Capacity for purposes of evaluation will be based on following criteria : Turnover: The interested party is required to have an average turnover of at least Rs. 100 Crore (Rupees One Hundred Crore only) or more based on last available audited financial statements of immediately preceding 3 financial years. Turnover would mean Gross Income or Gross Revenue. For the purposes of qualifying under Turnover criteria, combined Turnover based on audited financial reports of preceding 3 (three) financial years of the interested party and /or its promoter/promoter group and any other group company may be used. The audited financial statements for the relevant periods and entities need to be provided along with EoIs for supporting the same Incorporation/Existence: The interested party or its promoter/promoter group or any other group company on whose Turnover the interested party is relying upon shall have been in existence for atleast 5 (five) years as on April 1, The memorandum of association, articles of association, certificate of incorporation and other constitutional document(s) need to be provided along with EoI for supporting the same. 1.3 Financial Capacity Evaluation The interested party must fulfill following minimum financial requirements: Swiss Challenge 6 SBI, CAG, Hyderabad

7 Demonstration of ability to infuse funds The interested party must demonstrate its ability to infuse atleast Rs. 100,00,00,000 (Rupees One Hundred Crores Only) into the Company, to the satisfaction of SBI, by providing requisite supporting documents that showcase availability of funds with the interested party. For the purpose of demonstration of availability of funds, the supporting documents of the interested party and /or its promoter/promoter group and any other group company can be used. 1.4 Exchange Rate For the purpose of evaluation of the EoIs, the exchange rate to be used for conversion into INR (Indian Rupees) shall be the mean of the buying and selling rate quoted by SBI on the closing working day that precedes the date of the EoI. Swiss Challenge 7 SBI, CAG, Hyderabad