The lenders of Vidarbha Industries Power Ltd. (VIPL), a subsidiary of Reliance Power Ltd., are conducting the Swiss Challenge process for the sale of company’s outstanding debt.
The lead banker, Axis Bank, has issued an invitation for EOI for the sale of VIPL’s outstanding debt.
But the secrecy and lack of transparency around the proposed Swiss Challenge process leaves the potential bidders with more questions than the answers
The detailed invitation document for submission of EOI for the sale/assignment of VIPL’s outstanding debt does not even disclose the basic mandatory information to the potential bidders for enabling them to make a counter bid for the VIPL debt.
The EOI document does not mention the name of the anchor bidder. The document, without disclosing the name of the bidder, simply says that a binding bid has been received from an asset reconstruction company, which is the anchor bidder.
The EOI document is also silent on the value of the anchor bid. How the lenders expect the potential bidders to make a counter offer in the absence of information on the value of anchor bid, is a mystery.
The EOI document has no information on how the proposed Swiss Challenge process will be run and till what level the anchor bidder has the right of first refusal.
As per the regulations, all the lenders are required to make a disclosure of their exposure in the VIPL, on their respective websites, but even this information is not available to the potential bidders.
The manner in which the Swiss Challenge is being run by the lenders leaves the bidders with more questions than the answers
Strangely, the anchor bidder, i.e., CFM ARC had offered Rs 1,220 crore as against the promoter company, Reliance Power’s Rs 1,260 crore OTS offer, for the VIPL debt.
On what basis the lenders have decided to make CFM’s offer, which is less than Reliance Power’s offer. as an Anchor Offer, is also shrouded with mystery.
As per the available records, the size of the CFM’s balance sheet is Rs 1,000 crore, with a Net Profit of merely Rs 20 crore. With a balance sheet of this size, how the CFM will organise Rs 1,200 crore for this transaction.
The company also has no experience in the power sector or operating a power plant.
CFM ARC is among the four Asset Reconstruction Companies who have been issued show cause notices by the RBI post its special audit, following the Income Tax raids on the companies.
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