Lenders will have to take a massive haircut as they have decided to sell Videocon Group’s assets to Twinstar Holdings Ltd, a Vedanta Group company, at less than ₹3,000 crore. This is less than 10 per cent of the group’s overall outstanding debt of around ₹46,000 crore
The Committee of Creditors, which met on Tuesday, has agreed in principle to the Vedanta offer, banking sources told BusinessLine .
Sources said the lenders are left with no other option. “The liquidation value of Videocon’s assets is pegged at ₹2,600 crore; the Vedanta bid is slightly better than that,” the banking source said.
The Videocon Group’s former promoter, the Dhoot family, had made a proposal to the banks under Section 12A of the Insolvency and Bankruptcy Code (IBC), to repay about ₹30,000 crore for taking back control of the conglomerate. The Section allows withdrawal of the debt resolution proceedings under the National Company Law Tribunal (NCLT), but needs the approval of the majority of the lenders.
According to banking sources, the offer by the Dhoot family entailed repayments until 2035, which was not acceptable to many banks in Videocon’s CoC.
Credited to be the first Indian company to have got a licence to manufacture colour TVs in 1986, the Videocon Group was making air-conditioners, refrigerators and home entertainment systems, foraying later also into oil, gas, telecom, retail and DTH services.
The aggressive expansion led to increased borrowings, and soon businesses collapsed. The debt pile, which was around ₹7,000 crore in 2007, kept soaring. In 2018, Videocon was dragged to the NCLT by the State Bank of India after the Dhoots defaulted on loan repayments.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.