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videocon: Lenders to Videocon’s oil arm to vote on four resolution plans

Lenders of VOVL, the oil and gas exploration company of Videocon group will start voting on the four resolution plans received from the two Brazilian companies – Eneva Brazil and Petro Ria SA, a Vedanta entity and a fund of Prudent Asset Reconstruction Company, said two people aware of the development.

The resolution professional Pravin Navandar invited lenders to vote on the four plans from March 30.

Navandar did not respond to ET’s request for comment.

VOVL, formerly known as Videocon Oil Ventures, promoted by Venugopal Dhoot is undergoing insolvency proceedings.

The Brazilian companies have given plans for specific oil blocks, unlike the two Indian bidders. Eneva Brazil has offered $250 million while Petro Ria SA has offered $20 million, said one of the persons cited above.

TwinStar Technologies, promoted by Anil Agarwal of Vedanta, and RKG Fund, owned by Prudent ARC too, have given separate resolution plans. TwinStar and RKG Fund offered staggered payments of around ₹1,000 crore each, the person cited above said.

A significant portion of VOVL’s value is derived from a participating interest in the oil & gas asset held in Videocon Energy Brazil (VEBL), a step-down subsidiary of VOVL in Brazil through a joint venture with Bharat Petroleum Ventures (BPRL).

The resolution professional has received plans that require transferring VEBL’s stake in the joint venture with BPRL and subsequently giving the latter right of first refusal (ROFR) to match the offers it received under the corporate insolvency process, as reported by ET on January 2. The issuance of the notices for ROFR is a mandatory requirement under the contractual arrangements entered into by VEBL and BPRL, which is governed by Brazilian law. Giving BPRL a ROFR to match the highest bidder’s offer is also one of the voting agenda items, people cited above said.

Eneva, which had offered $350 million in the first round of bidding, lowered its offer to $250 million. The company lowered its offer because the value of the company gets depleted every time there is a cash call for making payment for exploration of the oil, the people said. After VOVL was admitted for insolvency, BPRL has been paying for VEBL’s cash calls, the people said.

“Lenders may reject all four offers since they are very low,” said one of the lenders. The highest offer of $250 million (₹2,075 crore) equates to about a 6% recovery. The resolution professional has admitted ₹30,640 crore claims from financial creditors, according to the claim list.

Government-backed National Asset Reconstruction Co (NARCL) initially offered ₹860 crore to VOVL’s lenders to acquire the debt. Subsequently, it was in talks with lenders to improve the offer to ₹1,200 crore under a 15:85 structure. Here, 15% of the consideration will be paid upfront, and the rest as security receipts payable on loan recover.

Early in December 2022, the National Company Law Tribunal approved a six-month extension to VOVL until May 22, 2023, to find a buyer.

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