The Hindu Business Line : Videocon goes it alone in second bid for Daewoo Elec

Mr Venugopal Dhoot, Chairman of the Group, told Business Line that the Group participated alone in the second bidding process for the Korean company this month.

Last week, Viedocon Industries Ltd and Ripplewood Holdings, a US-based private equity firm, put in separate bids, unlike in 2006, when they jointly placed a bid for Daewoo Electronics, which turned out to be the highest.

However, Mr Dhoot said, “Videocon and Ripplewood may join hands later, if necessary, during the course of negotiations”.

Internal rate of return

Regarding Videocon’s current offer, Mr Dhoot said it has been based on an expected internal rate of return (IRR) of over 25 per cent, a standard benchmark followed in case of acquisitions. The IRR is the annualised effective compounded yield on the investment.

The second round of bidding came after a downsizing exercise by the consumer electronics and durables company during the year. It also sold off some realty assets and minor business divisions.

The previous joint offer of $746 million was rejected in February this year, when the present owners of Daewoo Electronics creditors and joint-bidders could not agree on the valuation of certain receivables and assets, including inventory, as also extension credit after the sale. The bidding process was formally scrapped in February. As a part of the debt-rescheduling plan, Daewoo’s creditors have the right to manage the sale process.

This time around the ailing Korean company reported to have received a total of 10 letters of intent, all from non-Korean entities, by December 17, the deadline set by the group of creditors, who now have the controlling stake. Evaluation of offers is likely to start within a month, Mr Dhoot felt.

Videocon-Ripplewood last time had UBS and Citigroup as their advisors. Mr Dhoot said that a decision on this score would be taken early next month.