Financial Daily from THE HINDU group of publications
Saturday, Mar 23, 2002
Financial Daily from THE HINDU group of publications Saturday, Mar 23, 2002 |
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Financial Institutions Money & Banking - Financial Institutions Dabhol lenders may recall loans Balaji C. Mouli
NEW DELHI, March 22 THE domestic lenders to the Dabhol power project are planning to recall their loans, a step prior to the sale of assets of the company, according to top industry sources. This would also mean that the present process of selecting a new promoter for the venture through equity sale is likely to be abandoned. The domestic lenders to the project are IDBI, ICICI, IFCI, SBI and Canara Bank. If the lenders recall the loans, the equity value of the existing equity holders — Enron, GE, Bechtel and the Maharashtra State Electricity Board— will be nearly nil. This shift in approach is on account of the existing promoters' move to direct the sale proceeds into a Trust and Retention account. This would have meant that all the lenders to Enron would also have a charge on the sale proceeds. To ensure that only the existing secured lenders have a charge on the proceeds, the financial institutions and some global lenders recently moved the Court. The Court on March 22 issued an interim order which restricted Dabhol Power Company from filing for Chapter 11 under US bankruptcy laws as well as sought the appointment of a receiver. The domestic lenders are planning to recall the loans and make an application to the Debt Recovery Tribunal. Following this, the lenders plan to sell the assets. The lenders are planning for the sale of the Dabhol assets to the existing fray of six contenders — BSES Ltd, Reliance, Tata Power, Gas Authority of India Ltd (GAIL), Shell and Gaz De France. The asset sale route will be faster compared to the equity sale route since due diligence by the potential sponsors will not be required.
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