vovl: VoVL lenders green light sale of oil basins to two Brazil firms, with a rider

Lenders to VoVL, the oil and gas exploration company of Videocon Industries, Thursday approved a conditional sale of two oil basins to Eneva S A and one to PetroRio, said people aware of the development.

However, before selling the oil basins to the Brazilian gas operators, the lenders must give VoVL’s joint venture partner Bharat Petroleum Corp Ltd (BPCL) the right to match offers by Eneva and PetroRio, the people said. Venugopal Dhoot-promoted VoVL, formerly known as Videocon Oil Ventures Ltd, was admitted for insolvency in 2019.

BPCL to have 30 days to match offers
BPCL’s subsidiary BPRL Ventures BV and Videocon’s subsidiary Videocon Energy Brazil Ltd (VEBL) had a 50:50 joint venture for oil and gas exploration in Brazil. However, after 2018, Videocon failed to pay its share of cash calls for gas exploration that was made good by BPCL. As a result, BPCL’s participating interest increased to 61% while that of Videocon dropped to 39%, the people said.

The issuance of the notices for right of first refusal (ROFR) is a mandatory requirement under the contractual arrangements entered into by VEBL and BPRL Ventures that are governed by Brazilian law, resolution professional (RP) Pravin Navandar had told the National Company Law Tribunal (NCLT) while seeking a six-month extension in December 2022.

On Thursday, 90% of VoVL’s lenders voted to sell the Potiguar Basin and the Sergipe Basin to Eneva for $250 million. They voted to sell the Campos Basin to PetroRio for $30 million.

BPCL will have 30 days to match the Eneva and PetroRio offers that they made separately, the people said. If BPCL matches the offers, the government-owned entity will be required to submit a resolution plan for VoVL, which will be put to vote by the RP, the people said. This plan will have to be approved by the NCLT before lenders hand over the oil basins to the successful buyer.Government-owned BPCL is most likely to match the offer made by Eneva and PetroRio, said one of the lenders.

After undergoing insolvency proceedings for almost four years, lenders of VoVL may recover a little less than 8%. The RP, who has admitted Rs 30,640 crore claims from financial creditors, did not respond to ET’s queries.

Meanwhile, the resolution of Dhoot-founded Videocon Industries-with admitted claims of Rs 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 Twinstar Technologies, owned by Vedanta promoter Anil Agarwal. Lenders went back on an agreement to sell the company to Twinstar following criticism that the price was too low.

Lenders’ recovery on the proposed sale of Videocon Industries to Twinstar stood at 4.15%, while that on VoVL is expected to be 7.5% of admitted claims. There could be another backlash on account of this, which may further delay the resolution of the oil and gas company, said the lender cited above.

In December 2022, the tribunal allowed extension of the deadline until May 22, 2023, to finalise the resolution plan.