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Lenders see faster resolution of Videocon debt with three big new bidders

With the Adani and Jindal groups and Mukesh Ambani-owned Reliance Industries joining the race to buy Videocon Industries’ assets, lenders are expecting aggressive bids from the conglomerates for VIL’s consumer durables and overseas oil assets which are sold in separate auctions. The entire asset sale exercise is expected to be completed in the next six months by the lenders, said a banker.

A promoter entity of Naveen Jindal-owned Jindal Steel and Power has also submitted interest in the second round of bids for VIL’s consumer durable business. The deadline to submit bids for VIL’s assets ended on February 2. The entry of the three conglomerates has raised hopes of the lenders who are awaiting a resolution of VIL’s debt in January 2018. The sale of consumer durables and oil assets will recover at least 50 per cent of their exposure to VIL, said a banker.

The Adani and Jindal groups interest in VIL’s consumer durable business has surprised lenders as both do not have any presence in the electronics business.

With the Indian government offering productivity linked allowance worth $10 billion for semiconductors and for electronics manufacturing in India, both groups are looking at options for investing in the sectors.

As per the banking source, the outstanding debt of Videocon group companies as on December 31st 2017 – a day before the company was sent to the NCLT (National Company Law Tribunal) — was Rs 27,423 crore. The oil business, housed under Videocon Oil Ventures, a subsidiary of VIL, had a separate debt of Rs 23,120 crore.

The debt resolution of both consumer durable and oil business are being done separately after Videocon’s lead banker State Bank of India (SBI) sought separate bids for oil business. The consolidation of 13 consumer durables companies into a single debt resolution is being done to get the highest valuation.

An order of the National Company Law Appellate Tribunal (NCLAT) of January 5 this year quoting the information memorandum circulated among bidders pegs the valuation of Videocon Oil’s standalone foreign oil and gas assets at Brazil and Indonesia at $4.29 billion in 2017 which is projected to rise $7.02 billion by fiscal 2023.

In December 2020, Twinstar Holdings, a private company owned by Anil Agarwal, chairman of Vedanta Group, had won the race to buy the consumer durable business of Videocon Industries in the first round with a bid of Rs 2,962 crore. The Twinstar offer had sought a huge haircut from the lenders. But a few lenders led by Bank of Maharashtra, IFCI, and SIDBI moved the NCLAT, objecting to Vedanta’s winning bid, saying it was too little and would lead to a massive loss for them.

In January this year, the NCLAT ordered the lenders to seek fresh bids for Videocon Industries leading to the second round of bids.

The second round of bids for the oil and gas business was called after the first round failed to get any financial bids after four companies had submitted their expression of interest. Business Standard

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