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vovl: BPCL agrees to match Brazilian companies’ bids for two VOVL Oil assets

Bharat Petroleum Corp (BPCL) consented to match offers given by Brazilian companies for two separate oil basins of VOVL, the oil and gas exploration company of Videocon Industries, said two people aware of the development.

Lenders of VOVL, which is undergoing corporate insolvency, will start to vote on the BPCL plan on Monday, the people said. Most lenders are likely to vote in favour of BPCL’s plan, one of the persons cited above said.

BPCL’s subsidiary BPRL Ventures BV had entered into a 50:50 joint venture with Videocon’s subsidiary Videocon Energy Brazil for oil and gas exploration in the South American country. As a JV partner, it has the first right to match any offer that lenders receive for VOVL oil basins as per the contractual arrangements governed by Brazilian law.

During the middle of last month, 90% of VOVL’s lenders voted to sell the Potiguar Basin and Sergipe Basin to Eneva for $250 million. They voted to sell the Campos Basin to PetroRio for $30 million, as reported by ET earlier.

At the same time, they also voted to give BPRL Venture BV the first right to match the offers from Eneva and PetroRio. BPCL did not respond to ET’s request for comment.

After 2018, Videocon failed to pay its share of cash calls for gas exploration that were made good by BPCL. As a result, BPCL’s participating interest increased to 61% while that of Videocon dropped to 39%. It was thus natural for BPCL to match the offer, the people said.

Modest RecoveryAfter undergoing insolvency proceedings for almost four years, lenders of VOVL may recover a little less than 8%. The RP has admitted ₹30,640 crore in claims from financial creditors. The development comes at a time when lenders are evaluating a revised offer made by the government-promoted asset reconstruction company for the loans of VOVL, formerly known as Videocon Oil Ventures.

ET Bureau

Last month, National Asset Reconstruction Co (NARCL) improved its offer for VOVL by ₹100 crore to ₹1,200 crore. Lenders are considering the offer given in a combination of cash and security receipts.

Meanwhile, the resolution of Venugopal Dhoot-founded Videocon Industries – with admitted claims of ₹58,519 crore from financial creditors – has been in limbo for over a year.

The Supreme Court has stayed a proposal to restart the sale process of the consumer durables company following an appeal by Twin Star Technologies, owned by Vedanta promoter Anil Agarwal. The matter reached the apex court after lenders went back on an agreement to sell the company to Twin Star following criticism that the price was too low. Lenders’ recovery on the proposed sale of Videocon Industries to Twin Star stood at 4.15%, while that on VOVL is expected at 7.5% of admitted claims.

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