Banks expect to recover Rs 12K cr from sale of Videocon’s oil blocks in Brazil

Banks expect to recover Rs 12K cr from sale of Videocon’s oil blocks in Brazil

The revised valuation was discussed at a recent meeting of the bankers where they also accepted a request from potential bidders to extend the deadline for bids to the first week of January, these people said

Bankers are expecting to recover as much as Rs 12,000 crore or $1.6 billion from the sale of Videocon’s Brazil oil blocks after a spurt in oil prices resulted in a boost in the valuation of the assets, according to people in the know. This is at least 60% higher than what they had originally planned to recover from the sale of the assets when expressions of interest were first invited from potential bidders in September, according to these people.

The revised valuation was discussed at a recent meeting of the bankers where they also accepted a request from potential bidders to extend the deadline for bids to the first week of January, these people said. The bidders sought an extension of the timeline to conduct physical due diligence in Brazil. “Oil prices are inching towards $50 a barrel. That changes the valuation of the assets because exploration has started. We expect to recover at least 50% of our dues now,” an executive familiar with deliberations between the bankers said. At least five bidders – US’s Murphy Oil, European oil giant Wintershall DEA (owned by BASF), PetroRio, Vedanta and a local consortium comprising Indian businessman – are amongst potential bidders for the stake, ET reported on September 21.

A consortium of banks led by State Bank of India had loaned VOVL, a Videocon group company, close to Rs 24,000 crore to invest in a joint venture with Bharat Petroleum Corporation a few years back. The JV known as IBV Brasil Petroleo then went on to purchase a stake in lucrative blocks in the Sergipe basin of the South Atlantic Ocean. The bankers have appointed a new resolution professional to manage the sale of the VOVL assets. Abhijit Guha Thakurta is the resolution professional for the parent company, Videocon Industries. State Bank of India did not respond to ET’s queries.

The SBI consortium recently approved an offer from Vedanta group to takeover Videocon Industries, which holds the consumer durables and domestic oil exploration business of the now bankrupt group. Vedanta could benefit from acquiring the VOVL stake in the Brazil oil blocks as it is also vying for Bharat Petroleum Corporation, which owns the remaining stake in IBV Brasil Petroleo. The acquisition could help it consolidate its stake in the Brazilian company and control the oil assets, which have an estimated three billion barrels of oil reserves. This would be possible only if it is able to emerge as the successful bidder for BPCL as well as VOVL.

https://energy.economictimes.indiatimes.com/news/oil-and-gas/banks-expect-to-recover-rs-12k-cr-from-sale-of-videocons-oil-blocks-in-brazil/79933035

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