Reliance ARC, Aditya Birla ARC, and Arcil are on the shortlist for Vidarbha Industries

26 Jul 2023 , 12:45 PM

On August 8, the three shortlisted asset reconstruction companies (ARCs) will compete in a Swiss challenge auction held by Vidarbha Industries Power’s lenders, according to news reports.

The reports claimed that Aditya Birla ARC, Asset Reconstruction Company of India (Arcil), which is backed by Avenue Capital, and Reliance ARC have been shortlisted by lenders as viable contenders to submit counter proposals for the sale of the struggling power utility.

A greater one-time settlement offer (OTS) of Rs 1,260 crore was made by Reliance Power, a business owned by Anil Ambani that holds a controlling interest in the thermal power utility, as opposed to CFM ARC’s offer of Rs 1,220 crore. On August 8, CFM ARC, who is an anchor bidder, will have the first opportunity to match the highest offer that lenders submit.

One of the reports above claimed that Rare ARC’s declaration of interest was turned down. Process adviser SBI Caps required EoI applicants to submit a non-refundable bid process participation fee of 10 lakh when inviting bids. 

Counteroffers must be 5% greater than the anchor offer of Rs 1,220 crore, according to the lenders’ requirements.

According to a statement distributed by lenders soliciting counteroffers, the company had principal debt of Rs 2,569 crore and $26.7 million (or 220 crore) as of July 6. The lenders are State Bank of India, Axis Bank, Punjab National Bank, Bank of Baroda, Canara Bank, and Bank of Maharashtra.

At Nagpur’s Butibori industrial sector, two coal-based units with a combined capacity of 300 MW are run by Vidarbha. It had an arrangement in place with Reliance Infrastructure for the procurement of power. It gave Adani Transmission the Mumbai distribution business in 2017.

For one 300 MW unit, Vidarbha had a coal supply agreement with Western Coalfields, while for a second unit, it bought coal on the open market. However, WCL also cancelled its contract after Adani Electricity Mumbai ended the PPA. The Supreme Court is now deliberating the case.

Expectations of a swift recovery for lenders saddened by the Supreme Court judgment denying a bid to admit it for insolvency proceedings despite a default have been fueled by the fight to purchase the power producer.

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