The debt of Videocon-supported VOVL, one of the most troubled loans on their books, is being promoted by lenders through superior negotiations with the government-sponsored ARC.
According to news reports, the National Asset Reconstruction Company Ltd. (NARCL) submitted a legally-binding offer of Rs860 crore last week to assemble the debt of the oil and fuel exploration company VOVL. VOVL lenders will push NARCL to increase the offer because it is significantly less than other bidders' proposals.
The structure of NARCL's offer is 15:85, meaning that 15% of the consideration will be paid upfront while the remaining 85% would be paid over the course of 5 years in the form of security receipts (SRs).
Although the government guarantees these SRs, the overall supply is as little as 3% of the claims made by the money collectors.
According to a report by ET on September 28, the oil exploration company Eneva Brazil has offered Rs2,800 crore or 9% of the claims made by the debt collectors. Twin Star Overseas owned by Anil Agarwal bid Rs1,200 crore or around 4% of the declared amount. Petro Rio SA offered a bid Rs160 crore, while RKG Fund-1, owned by Prudent Asset Reconstruction Co., presented an Rs1,000 crore proposal.
The reports said that because NARCL's offer is significantly less than those obtained from other parties during the insolvency procedures, the banks' boards may not authorize it until the quantity is increased.
The lenders will retain a Swiss offer public sale seeking counterbids from various asset reconstruction companies if the boards of all banks accept NARCL's offer. If there is a counteroffer, NARCL may have the first right to match it.
NARCL has made binding offers for six companies over the past few months, resulting in Swiss Challenge auctions. These include Helios Photo Voltaic Ltd., Meenakshi Energy, SSA International, Mittal Corp., Jaypee Infratech, and Consolidated Construction Company Ltd.
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