Swan Energy’s Financial Support: A Turning Point in Reliance Naval’s Revival Journey
Swan Energy Ltd, the company that acquired the Anil Ambani group’s Reliance Naval & Engineering (RNEL) in December 2022, has announced the release of a significant upfront payment of Rs 50 crore as per the National Company Law Tribunal’s (NCLT) order. This payment is part of the approved resolution plan for RNEL.
In December 2022, Swan Energy, leading the Hazel Mercantile consortium, presented a plan worth Rs 2,100 crore for Reliance Naval Defence & Engineering. This plan was approved by the Ahmedabad special bench of NCLT. Notably, proposals from other entities like Jindal Steel and Power and Reliance Infrastructure were rejected. RNEL was subsequently renamed Swan Heavy Industries Ltd.
The resolution plan outlined by NCLT required Swan Energy to make an upfront payment of Rs 293 crore to RNEL’s lenders by March 23, 2023. However, Swan Energy extended this deadline to July 23, 2023. Despite the extension, the company faced challenges in arranging funds within the given time frame. After seeking an extension from NCLT, the company was directed to make the payment in line with the resolution plan, before any further extensions could be considered.
Following the NCLT’s order, Swan Energy promptly released Rs 50 crore towards the proposed resolution plan. The company, in an official statement, confirmed its compliance with the NCLT’s directive and the consent of secured financial creditors.
Led by businessman Nikhil Merchant and his family, Swan Energy collaborated with Hazel Mercantile Ltd through a special purpose vehicle, Hazel Infra Ltd, to acquire RNEL. Swan Energy, a diversified business group involved in oil and gas, real estate, and textiles, holds a 74% stake in the SPV, with Hazel Mercantile owning the remaining portion.
RNEL, formerly known as Pipavav Shipyard, boasts an impressive infrastructure, including a 720-meter seafront and a 685-meter outfit quay, making it one of the world’s largest dry docks. The resolution plan, a significant development in RNEL’s three-year-long saga, aims to recover over Rs 12,429 crore owed to financial creditors, including institutions like the State Bank of India and the Union Bank of India.
As per the approved resolution plan, existing equity shares held by shareholders will be canceled, with one fresh equity share of Rs 10 face value issued for every 275 existing shares. This restructuring will result in 26,82,150 ordinary equity shares of Rs 10 each, marking a crucial step in RNEL’s path towards resolution and recovery.