The National Company Law Tribunal (NCLT) has approved billionaire Anil Agarwal’s £300 million offer for the debt-ridden Videocon Group. The offer by Twin Star Technologies, a company owned by Agarwal, is against the more than £4.6 billion debt of the Videocon Group. The transaction, when completed, will be Agarwal’s third asset purchase under the Indian bankruptcy code after Electrosteel Steels and Ferro Alloys Corporation.
Lenders of Videocon Group, comprising 13 entities, had sought NCLT’s nod after they accepted Agarwal’s proposal in December last year. In 2019, NCLT had allowed combining multiple bankruptcy proceedings against 13 Videocon Group companies into one. The NCLT nod for Agarwal’s proposal comes with riders. One of these is that payment to the dissenting lenders will have to be a priority. This is the first consolidated group resolution under the bankruptcy route.
Videocon Group, with interests in consumer appliances and oil, was pushed into bankruptcy in 2017 after it defaulted on loans. Its erstwhile promoter, the Dhoot family, had offered to clear the loans in a bid to pull the 13 companies out of bankruptcy proceedings. But the lenders turned down the Dhoots’ proposal and chose Twin Star’s bid for Videocon.
Agarwal was interested in Videocon as his Vedanta Group holds a 23% stake in the Ravva oil field. And when the Videocon transaction is completed, Vedanta’s stake in the oil field will increase to 48%, thus becoming its largest shareholder. Public sector company ONGC holds 40% in the Ravva oil field. The average output from the Ravva field was 14,232 barrels of oil equivalent per day in fiscal 2020.
Interestingly, Vedanta has shown interest in buying Bharat Petroleum Corporation (BPCL), in which the government plans to sell its 53% stake. Vedanta’s interest in BPCL is driven from the synergies with its oil & gas business. The more than three-year delay in the debt resolution of Videocon highlights the challenges faced by lenders to recover their money even as the Covid pandemic threatens to add to bad loans.
