Reliance Industries Ltd (RIL), India’s largest company in market valuation, is planning to make a bid for Videocon’s oil assets after the lenders called for fresh bids for them.
If RIL succeeds in acquiring them, it will be its another big-ticket acquisition under the Insolvency and Bankruptcy Code (IBC), 2016, after it won the race for Alok Industries, a textile firm, and Reliance Communications’ telecom tower assets. RIL is also the frontrunner for Sintex Industries, a textile firm.
When contacted, an RIL spokesperson declined to comment.
According to the order of the National Company Law Appellate Tribunal (NCLAT) of January 5 this year, the valuation of the standalone foreign oil and gas assets of Videocon was estimated at $4.29 billion in 2017, and it was projected to rise to $5.08 billion in 2019, and $7.02 billion in 2023.
Videocon Industries was sent to bankruptcy court in January 2018 by its lenders led by State Bank of India after the company defaulted on its loans worth Rs 64,637 crore. Of this, debt worth Rs 23,120 crore was parked with Videocon Oil Ventures Ltd (VOVL), which has oil assets in Brazil and Indonesia. Videocon directly owned a minority stake in Cairn’s Ravva field off the Andhra coast. VOVL acquired stakes in foreign oil blocks along with its partner, Bharat Petroleum Corporation, an Indian government-owned oil major.
While the bankruptcy proceedings of the Videocon Group companies were on, State Bank of India kept aside VOVL’s oil assets for separate bankruptcy proceedings. The lenders did not receive financial offers in September last year after four companies including Vedanta expressed their interest. With RIL in the race, the lenders are expecting to close the transaction in the next few months.
In December 2020, Twinstar Holdings, a private company owned by Anil Agarwal, chairman of Vedanta Group, had won the race to buy Videocon Industries with a bid of only Rs 2,962 crore. The Twinstar offer sought a 95 per cent 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.
Videocon Group fell into a financial crisis after the Supreme Court cancelled its wireless telephony licence in 2012 and VIL’s investment in the telecommunications (telecom) arm turned bad. At the same time, the loans taken by the telecom arm from Indian banks had also become non-performing assets. Business Standard News