BTL EPC Ltd, the engineering firm from the stable of the Shrachi group, has been declared as the successful resolution applicant for the debt-laden McNally Bharat Engineering Co Ltd.

The Todi family owned company BTL received a letter of intent (LoI) from the resolution professional (RP) of McNally, which was promoted by the Khaitan family of Calcutta, this evening.

BTL now has to accept the LoI and furnish a performance bank guarantee of Rs 18.81 crore by August 3, 2023, according to the terms of the LoI.

The issuance of LoI marks an important milestone in the hotly contested battle for McNally between Calcutta-based BTL and the Naveen Jindal group firm Nalwa Steel & Power. There have been two rounds of bidding for McNally so far. In the first round, BTL is learnt to have emerged as the highest bidder while in the second, which took place in April this year, Nalwa topped the auction.

In the second round of bidding, the price discovered in the first round — the offer made by BTL — was considered to be the base price. During the open auction, the bid could be increased by Rs 10 crore. Nalwa came on top when BTL decided not to match the former’s offer of Rs 425 crore.

In the Swiss auction method followed during the first round of bidding, BTL had put in a bid of Rs 320 crore compared to Rs 273 crore bid by Nalwa. However, after a series of legal developments another round of bidding was called to maximise value.

Sources said both the companies were asked to put up their respective resolution plans before the committee of creditors of McNally. The plan submitted by BTL, apart from upfront payment and other financial consideration, offered a 5 per cent equity to the creditors as well.

It is learnt that the net present value (NPV) of BTL’s plan was found to be higher than Nalwa’s, leading to the declaration of the Todi firm as the successful resolution applicant for McNally.

After the formalities of LoI and bank guarantee are done, the plan will have to be submitted before the National Company Law Tribunal, Calcutta, for approval. A fresh round of litigation cannot be ruled out by aggrieved parties.

McNally owes Rs 3,700 crore to the financial creditors, according to the claims admitted by the RP Ravi Sethia.

In FY23, the company posted a loss of Rs 2,471.2 crore on a total income of Rs 270.06 crore.

Seven firms belonging to the Williamson Magor group also claimed close to Rs 1,770 crore from McNally. Many believe the credit support extended by the Magor group, owned by the Khaitans, led to the financial stress in otherwise solvent operating companies such as Mcleod Russel India Ltd and Eveready Industries India Ltd.

None of the resolution plans, submitted by BTL and Nalwa, is going to offer any meaningful payments to these firms.