Lenders to Mumbai-based bankrupt truckmaker AMW Motors have approved a resolution plan by US electric vehicle manufacturer Triton EV by an overwhelming majority in a vote completed over the weekend, four persons aware of the details said.
Lenders led by IDBI Bank and Indian Overseas Bank (IoB) approved Triton’s plan by near absolute majority or 99.60% but with a deep haircut to the total outstanding loans. Triton has offered Rs 210 crore in cash to creditors of AMW Motors at more-than-94% haircut to lenders who have total admitted claims of Rs 3756 crore.
IDBI Bank, with 24% or Rs 901 crore of dues from AMW, is the bank with the highest exposure followed by IoB with Rs 694 crore of loans due constituting 18.50% of total dues.
“This loan account has been overdue for more than six years. It was taken to the bankruptcy court in 2020 and was just about to be liquidated when this offer came about. Yes, the haircut is steep, but it is still higher than the liquidation value and much better than going through liquidation which sometimes takes months, if not years, with no guarantee of any recovery,” said a person involved in the process.
The Anirudh Bhuwalka promoted company Asia Motor Works or AMW Motors first rolled out trucks from its 50000 units factory in Bhuj in 2008.
In a short span of time, AMW started moving up the ranks. At its peak, the company sold over 10000 trucks in FY-12 and had grabbed 25% market share in the growing tipper truck segment in the country. For a brief while it was also the third largest medium and heavy truck maker in the country ahead of VE Commercial Vehicles.
The decision to expand the business further and a prolonged downcycle in the economy between 2012-2015, derailed AMW Motors. For a significant time, the company was struggling to even secure working capital to make trucks. Bhuwalka also reached out to multiple global truck makers like Kamaz and Paccar to bail him out of the tough situation, but nothing fructified.
In its last year of operation, AMW incurred a loss of Rs 1268 crore in FY-19 at a revenue of Rs 44 crore. It had accumulated losses of Rs 14292 crore on its books, according to information on the corporate affairs ministry website accessed through business information platform Tofler.
Bankers said Triton’s offer was the best on the table for a company struggling to survive. The full cash payment was also an incentive to settle despite such a huge haircut.
“We have tried to find a buyer for this company many times in the last six years, but nothing worked out. The truth is there was nothing else on the table and if we don’t take this then we will also not get what we have now,” said another person explaining the rationale for the overwhelming vote.
Other lenders to AMW Motors include Bank of India, Central Bank of India, UCO Bank, Punjab National Bank, Bank of Baroda and State Bank of India. Resolution professional Avil Menezes did not reply an email seeking comment.
US based Triton EV specialises in manufacturing lithium battery cells and electric vehicle controllers in addition to long range electric vehicles. The company manufactures electric SUVs, sedans, semi-trucks, rickshaws and defence EVs in the US, according to the company website.
Earlier in the month, Triton had signed an MoU with Gujarat government to invest over Rs 10000 crore in electric truck manufacturing in the state over a period of five years. It claimed that the plant will provide direct and indirect employment of 10000 people in the state.
AMW Motors is the second Bhuwalka promoted company to undergo resolution under the IBC process in less than a year. In September last year bankers approved a plan by Steel Strips Wheels to take over AMW Motors’ affiliate company AMW Autocomponent (AACL) under corporate insolvency resolution process. The National Company Law Tribunal (NCLT) is yet to approve that transaction.
After the vote, lenders will also seek an approval from the NCLT to proceed with the transaction.
Triton Electric Vehicle will start the plant with an initial investment of INR 1,200 crore in the current financial year. The company’s total investment will be INR 10,800 crore. The plant will create direct and indirect employment opportunities to about 10,000 people, the statement said.
The MOU signed by two firms outlines a three-phase strategy that will see Thalamus Irwine and Triton roll out AI systems over a three year period that will see Thalamus Irwine’s AI technology deployed into Triton’s Electric Vehicles.
