Imagicaaworld Entertainment bidder Malpani seeks more time to submit binding letter of intent
- ByStartupStory | April 25, 2022
The Malpani Group, the successful bidder for Imagicaaworld Entertainment, has asked lenders for some more time to submit its binding letter of intent, already delaying the six-month-old resolution process further.
Last week, the group was asked for an INR 10 crore guarantee to initiate the sale process. However, Malpani has asked for time till May 6, citing the unavailability of directors. Lenders, though, remain hopeful about completing the transaction by the end of May.
“Lenders had asked Malpani to submit its provisional letter of intent together with an INR 10 crore guarantee within 2 days in a letter on April 21. In reply to this letter, Malpani wrote to lenders saying they cannot go ahead within the stipulated time as some directors are unavailable. They have asked for time till May 6,” said a source aware of the development
The Ahmednagar-based Malpani Group was the only bidder for debt-laden Imagicaaworld, which owes lenders a minimum of ₹1,417 crores. The Malpani Group has varied interests ranging from green energy to FMCG real estate and theme parks in Maharashtra.
According to the terms agreed to by lenders and media reports, Malpani’s offer totals ₹575 crores. Under the proposed deal, the Malpani Group would also get a 70% stake valued at INR 500 crore in Imagicaaworld, and lenders will hold a 13% stake worth INR 75 crore. This constitutes a 59 percent haircut for lenders, led by the Union Bank of India.
Imagicaa owns several theme parks around the cities of Pune and Mumbai. The theme park has been under severe financial strain due to rising costs in the last couple of years, whose woes have been further accelerated by the Covid-19 pandemic.
The company’s stock price has doubled since the deal was first reported by Economic Times in October 2021, touching a 52-week high of INR 18.63 in early April. It ended Friday 5% higher at INR 17.57 on the BSE.
“Malpani has just asked for a few days’ time. We do not see many challenges and are still confident of completing this before the end of May. But yes, because of the delays, the buyer may lose some business potential as both the school vacation in May plus the rainy season after that are two big windows for entertainment parks in Pune and Mumbai,” said a person involved in the negotiations.
Lenders may also have to call for a second round of bidding to challenge the single bid they have, according to the normal process, which could further delay the closure of the deal.
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