Vedanta among 11 bidders vying for Videocon's Brazil assets worth $2 bn

If sale is successful, lenders will get Rs 15,000 cr more from Videocon's debt resolution, taking their recovery to over 40%

Indian lenders have received expressions of interest from 11 bidders, including Wintershall Dea GmbH of Germany, PetroRio SA of Brazil, and India’s Vedanta for Videocon Industries’ (VIL’s) Brazil assets, valued at $2 billion. If successful, the lenders will get an additional Rs 15,000 crore from VIL’s debt resolution, thus taking their recovery to over 40 per cent.

Vedanta’s holding firm, TwinStar, has already won the mandate to buy Videocon’s Indian assets for Rs 3,000 crore and has offered a 6 per cent stake in VIL to the lenders.

Wintershall has requested the deadline for submitting the resolution plan be extended by at least a month since it requires time to review the geological data and obtain internal board approval. It has expressed a strong interest in the Sergipe-Alagoas Basin in Brazil, said a source close to the development.

At the same time, PetroRio is conducting due diligence and has revised its binding offer to acquire the Campos Basin. Being an operator, it is keen to acquire the asset, the source said.

To conclude its due diligence, Eneva SA of Brazil sought more information about the assets and asked for an extension until the end of July because it is required to obtain internal board approval to make the bid. The bidder has also requested a call with Bharat PetroResources, a subsidiary of Bharat Petroleum Corporation and the joint venture partner of Videocon, to gain assurance on the transaction.

Vedanta, one of the strongest contenders, is conducting due diligence and has requested an extension of Halliburton VDR (virtual data room) and said it would submit the resolution plan in 15 days.

“Oil prices are going up, which is increasing the valuation of the assets. The banks have decided to give additional time as desired by the bidders,” said a banker. “We are expecting the bids to go past the $2-billion mark,” he added.

VIL was referred to the National Company Law Tribunal (NCLT) in 2018 for defaulting on loans worth Rs 62,000 crore. The loans included corporate guarantees given by VIL, the flagship company, under the obligor-co-obligor structure for the oil and gas business to the tune of Rs 20,000 crore. Once the company was sent to the NCLT, Indian banks filed their claims in respect of the guarantee while, at the same time, running the corporate insolvency resolution process of VOVL (formerly Videocon Oil Ventures), which held all the oil and gas assets. 

At the NCLT, the bankers filed claims against both the borrower (VOVL) and the guarantor (VIL) simultaneously. While the VIL standalone debt worth Rs 30,000 crore was resolved with TwinStar winning the race for the Indian assets, the rest of VIL’s debt will be completed once the lenders select the highest bidder for the Brazilian assets.

The promoters of VIL — the Dhoot family — had submitted an application to the committee of creditors under Section 12A of the Insolvency and Bankruptcy Code last year, but failed to get the mandatory 90 per cent votes from the lenders. The lenders had cleared TwinStar’s offer in December last year.

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.