Vidarbha Industries Power debt to be auctioned
POWER & RENEWABLE ENERGY

Vidarbha Industries Power debt to be auctioned

According to individuals familiar with the matter, the lenders of Vidarbha Industries Power have decided to conduct an auction to sell the company's debt before the end of September. During the meeting, the lenders assessed three offers: a one-time settlement proposed by the promoter company Reliance Power, as well as separate offers from CFM Asset Reconstruction Company (ARC) and the government-backed National Asset Reconstruction Company (NARCL).

Reliance Power has made the highest offer, amounting to Rs 12.60 billion. This offer includes an upfront payment of 10 per cent (Rs 1.26 billion), with the remaining balance to be paid within 75 days. It is worth noting that Varde Partners, which infused Rs 9.3 billion in September of the previous year, supports Reliance Power's offer by holding a 15 per cent equity stake in the company.

CFM ARC has offered Rs 12.2 billion, with 5 per cent to be paid upfront and the remainder to be paid over a period of 90 days.

NARCL's offer amounts to Rs 11.2 billion, comprising 15 per cent as upfront cash and the rest as security receipts (SR) payable over a span of five years. The government has guaranteed the shortfall in recovery from the SR.

Both Reliance Power and CFM ARC have suggested to the lenders that their respective offers be considered as anchor bids for the Swiss challenge auction. The anchor bidder holds an advantageous position in a Swiss challenge auction as they have the first right to match any counteroffer received by the lenders during the auction.

"To maximise recovery, the highest bidder is always selected as the anchor bidder," stated one of the lenders. "In this case, it is likely that the promoter's offer will be the anchor bid," they added.

The lenders of Vidarbha Industries Power include State Bank of India, Axis Bank, Bank of Baroda, Punjab National Bank, Canara Bank, and Bank of Maharashtra. These lenders have appointed SBI CAPS as the process advisor to oversee the sale of their debt.

As per a National Company Law Tribunal order dated January 29, 2021, the lenders have an exposure of Rs 29.87 billion to the power company.

Last July, the Supreme Court dismissed Axis Bank's petition to initiate insolvency proceedings against Vidarbha Industries, stating that the tribunal should have considered external factors contributing to the borrower's payment delays when approving the company's admission.

According to individuals familiar with the matter, the lenders of Vidarbha Industries Power have decided to conduct an auction to sell the company's debt before the end of September. During the meeting, the lenders assessed three offers: a one-time settlement proposed by the promoter company Reliance Power, as well as separate offers from CFM Asset Reconstruction Company (ARC) and the government-backed National Asset Reconstruction Company (NARCL).Reliance Power has made the highest offer, amounting to Rs 12.60 billion. This offer includes an upfront payment of 10 per cent (Rs 1.26 billion), with the remaining balance to be paid within 75 days. It is worth noting that Varde Partners, which infused Rs 9.3 billion in September of the previous year, supports Reliance Power's offer by holding a 15 per cent equity stake in the company.CFM ARC has offered Rs 12.2 billion, with 5 per cent to be paid upfront and the remainder to be paid over a period of 90 days.NARCL's offer amounts to Rs 11.2 billion, comprising 15 per cent as upfront cash and the rest as security receipts (SR) payable over a span of five years. The government has guaranteed the shortfall in recovery from the SR.Both Reliance Power and CFM ARC have suggested to the lenders that their respective offers be considered as anchor bids for the Swiss challenge auction. The anchor bidder holds an advantageous position in a Swiss challenge auction as they have the first right to match any counteroffer received by the lenders during the auction.To maximise recovery, the highest bidder is always selected as the anchor bidder, stated one of the lenders. In this case, it is likely that the promoter's offer will be the anchor bid, they added.The lenders of Vidarbha Industries Power include State Bank of India, Axis Bank, Bank of Baroda, Punjab National Bank, Canara Bank, and Bank of Maharashtra. These lenders have appointed SBI CAPS as the process advisor to oversee the sale of their debt.As per a National Company Law Tribunal order dated January 29, 2021, the lenders have an exposure of Rs 29.87 billion to the power company.Last July, the Supreme Court dismissed Axis Bank's petition to initiate insolvency proceedings against Vidarbha Industries, stating that the tribunal should have considered external factors contributing to the borrower's payment delays when approving the company's admission.

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