ISGEC Faces Payment Default in $78 Million Subsidiary Sale Deal, Buyer Fails to Honor Agreement

ISGEC Heavy Engineering Ltd has disclosed a significant setback in its overseas divestment strategy, as the buyer of its Cayman Islands-based subsidiary has failed to make payments under a $78 million Sale and Purchase Agreement (SPA). The development, confirmed today, September 15, 2025, raises concerns over the recovery of dues linked to the sale of Bioeq Epergy Holding One and associated receivables from step-down entities.

 

The transaction was originally structured to include the sale of equity and assignment of trade and loan receivables, but the buyer has defaulted on the agreed payment schedule, prompting ISGEC to reassess its exposure and legal options.

 

Key Highlights

Deal Value: $78.87 million (approx. ₹675 crore), including equity sale and receivables

 

Buyer Default: No payments received despite signed SPA and assignment agreements

 

Subsidiary Involved: Bioeq Epergy Holding One, Cayman Islands

 

Receivables Impacted: $39.07 million in trade receivables and $29.80 million in loan and interest receivables

 

Disclosure Date: September 15, 2025, via regulatory filings and auditor review notes

 

The SPA was executed in December 2024 through ISGEC Singapore, a wholly owned subsidiary of the company. Alongside the equity sale of Bioeq Epergy Holding One, ISGEC had also agreed to transfer receivables from its step-down subsidiaries at book value. The total exposure included $10 million for equity, $39.07 million for trade receivables, and $29.80 million for loan and interest receivables.

 

However, as per the latest auditor review and company disclosures, the buyer has failed to honor the payment obligations, leaving ISGEC with a significant receivables gap. The company is now evaluating legal remedies and alternative recovery mechanisms, including potential arbitration or restructuring of the deal.

 

This development comes at a time when ISGEC is actively restructuring its global operations and focusing on core engineering and manufacturing businesses. The non-payment could impact short-term cash flows and provisioning requirements, although the company has not yet announced any impairment charges.

 

ISGEC’s management has assured stakeholders that the issue is being handled with urgency and that it remains committed to protecting shareholder value. The company continues to maintain a strong domestic order book, including recent wins in boiler systems, sugar plant equipment, and defence fabrication.

 

Industry analysts suggest that while the default is a setback, ISGEC’s diversified revenue streams and robust domestic operations may cushion the financial impact. The company is expected to provide further updates in its Q2 FY26 earnings call.

 

Sources: ISGEC Official Disclosure, Economic Times, Moneycontrol