'Videocon lenders to eventually take 50-55% haircut'

Lenders to Venugopal Dhoot-founded Videocon Group will eventually take 50-55 per cent haircut and not 95 per cent as is being reported after considering about Rs 15,000 crore expected from the sale of the group's overseas oil and gas assets, its former CFO Rajneesh Gupta claimed.

Videocon Industries Ltd, which is comprised of its consumer electronics business and interest in the Ravva oil and gas field, and its overseas oil and gas assets, mainly comprising of oil blocks in Brazil, are being auctioned separately to recover unpaid loans.

While Anil Agarwal-led Vedanta Group has picked up Videocon Industries for Rs 2,962 crore, the bids for overseas assets are yet to be decided.

Gupta, whose resignation as CFO was approved by resolution professional on March 30, 2021, claimed Videocon's consolidated CIRP (Corporate Insolvency Resolution Process) recovery is likely to exceed 40 per cent of the exposure.

"Yes, there is a haircut but it is not 95 per cent, it is around 50-55 per cent.

"The biggest catch, which everyone is failing to understand is that despite the claim of oil and gas being included in the said amount, the said investment of VIL in oil and gas assets, which are worth around Rs 15,000 crore, is not forming part of the acquisition by Vedanta group," said Gupta.

Gupta claimed Twin Star Technologies Rs 2,962 crore bid, which was approved by NCLT on June 9, includes a cash infusion to the outstanding loan and equity of around 8 per cent which may value around Rs 5,000 crore in the next 5 years considering the intrinsic valuation of the real estate, valuation of brand "Videocon" and other brands together with already installed capacities of consumer electronics and home appliances.

"So, in nutshell, banks are likely to recover around Rs 7,962 crore, which translates to around 28 per cent of the loan stated above.

"Had it not been Covid-19 pandemic, this recovery could per cent much," he added.

Banks have kept aside oil assets owned by Videocon Industries Limited, which are worth around Rs 15,000 crore, and the same is being disposed of by undertaking separate corporate insolvency resolution process in respect of the same.

The said oil and gas business has garnered huge expression of interest from domestic and international players.

"Thus, the proceeds on consolidated basis are expected to be around Rs 22,962 crore as against... Thus, the recovery is expected to be around 45 per cent and not 5 per cent as alleged," he added.

Videocon Industries and its 12 group companies had a total admitted claims of Rs 64,838.63 crore.

Earlier this week, the bankruptcy and insolvency appellate tribunal NCLAT had the takeover bid by Anil Agarwal's Twin Star Technologies for Videocon Industries along with its 12 group firms, over the plea filed by two dissented creditors - Bank of Maharashtra and IFCI Ltd.

The National Company Law Appellate Tribunal (NCLAT) stayed the order passed by the Mumbai bench of NCLT approving the resolution plan on June 9 and directed to maintain "status quo ante" as before passing of the order, till the next date of hearing.

It has also directed the resolution professional of the company will continue to manage the Videocon Group companies.

Earlier, in its 47-page-long judgement, NCLT while approving Anil Agarwal's Twin Star Technologies' Rs 2,962.02 crore-bid had observed creditors of debt-ridden Videocon Industries Ltd will be taking nearly 96 per cent haircut on their loans and the bidder is "paying almost nothing".

The NCLT had observed that the resolution plan is giving 99.28 per cent to the operational creditors, which it sarcastically hinted to be as a "Haircut or Tonsure, Total Shave".

It has requested the Committee of Creditors (CoC) and Twin Star Technologies to increase the pay-out amount to these Operational Creditors as they are getting only 0.72 per cent of their admitted claim amount.

Photograph: Francis Mascarenhas/Reuters