Videocon Industries was among the first to go under the hammer in 2017. Cut off the scenario today and the company has yet to close a deal with a buyer. After Anil Agarwal won the bid to acquire the company in June this year, Venugopal Dhoot, the original promoter of Videocon, referred the National Company Law Appellate Tribunal (NCLAT) on the grounds that the company was being sold cheaply. After four years, the transaction is back in first place and for the wrong reasons.
Total debt on Videocon’s books is up to Rs 46,000 crore, with Twin Star Technologies, an Agarwal backed company, getting the green light this June for a bid of Rs 2,900 crore or a massive 95% haircut to the lenders. It did not escape too many people that this was very close to the liquidation amount of Rs 2,600 crore.
Also read: NCLAT remains the offer from Anil Agarwal-owned Twin Star to acquire Videocon
Interestingly, Dhoot made an offer last October to buy back his company for Rs.31,789 billion, which lenders refused. The problem, says one of the lenders, was that there was no clarity on how he was going to fund it. Agarwal’s strategic interest is in the Ravva oil and gas field, in which it already holds 22.5 percent. Videocon has a 25 percent stake and the buyout would have put Agarwal in a strong position.
As things stand, the fate of Videocon is in the balance and no different than in 2017, when it went before the bankruptcy court. It was part of 12 companies which also included Jaiprakash Industries. The big worry is the time that will be lost and what is ahead of Videocon. Those who follow the development say the resolution process could take anywhere from 4 to 12 months.
Also read: Former Videocon promoter Venugopal Dhoot moves NCLAT against Twin Star’s solution plan
Arush Khanna, Partner, Numen Law Offices, a law firm based in New Delhi and Mumbai, explains how the story could develop from here. “If NCLAT sends the plan back to the creditors’ committee for reconsideration, it is likely that Twin Star Technologies will bring it to the Supreme Court. The other scenario could result in NCLAT rejecting Videocon’s appeal, in which case the dissenting creditors could leave. In either scenario, the wait for a resolution to this matter is getting longer and longer. “
He adds, “There is no doubt that the Videocon offering is under suspicion, none of the companies referred to bankruptcy courts have seen anything as complicated as this.”
At a time when NCLAT was established to quickly resolve both contentious and complicated bankruptcy matters, the sale of Videocon Industries embodied that process in a way. How this is completed is going to be interesting for all the wrong reasons. Obviously, time has stood still here.
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