The lenders to Vidarbha Industries Power (VIPL), a subsidiary of Reliance Power, have initiated a process to restart the company’s resolution process, with the advisor now readying to invite fresh bids. SBI Caps, the newly-appointed advisor, will now invite bids for the sale or One Time Settlement (OTS) of VIPL debt.
The advisor is already in receipt of three suo moto bids it received earlier – from Reliance Power, CFM Asset Reconstruction and National Asset Reconstruction Company (NARCL) – and is expecting additional bids. It will also put in place a criteria for evaluating all the bids and finalise an anchor bidder (highest bidder), sources close to the development said.
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After evaluating the bids, SBI Caps will initiate a Swiss Challenge method to maximise the recovery for lenders, while the advisor has also fixed September 30 as the deadline to complete the process. The lenders had been meeting over the last couple of days to finalise the resolution process, they added.
According to Reliance Power’s annual report, VIPL has outstanding loans of Rs 2,216 crore as of March 31, 2022. The lenders to the firm include State Bank of India, Canara Bank, Bank of Maharashtra, Punjab National Bank and Axis Bank, among others.
Earlier, three bidders had evinced interest in VIPL’s resolution process, including that from Reliance Power. The Anil Ambani group firm, jointly with Singapore’s Varde Partners, had offered Rs 1,260 crore under a one-time settlement, which was to be paid up front in cash.
Ahmedabad-based CFM Asset Reconstruction, with an all cash offer of Rs 1,220 crore, and NARCL – with an offer of Rs 1,120 crore – are the others in the fray. NARCL had offered to provide 15% in cash and the remaining over a period of five years, and the Net Present Value of the offer was at Rs 850 crore.
In July last year, the Supreme Court had rejected a plea by Axis Bank following default of loans to admit VIPL for Corporate Insolvency Resolution Process (CIRP). The power company had moved the apex court after the National Company Law Tribunal had approved admitting it for CIRP, and later on March 2, 2021, the National Company Law Appellate Tribunal had refused to stay the proceedings.
VIPL owns a domestic coal-based project with a capacity of 600 MW at the Butibori Industrial Area in Nagpur, which has not been operational since January 15, 2019. This was due to protracted delays in issuing regulatory orders and lack of fuel supply for one of the units, an earlier ICRA report said.
Following this, the company was not getting any income that led to delays in servicing its debt obligations, the report had added.