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DPC lenders likely to invite fresh bids

George Smith Alexander & S Ravindran

Lenders to the beleaguered Dabhol Power Company are likely to invite fresh bids for the company as they plan to sell DPC's assets and not its equity, as envisaged earlier, according to sources.

Both the domestic and offshore lenders to will take a final decision on this issue at their meeting in Mumbai on April 8 and 9.

"New bids may be invited as the earlier expressions of interest were submitted for acquiring the 85 per cent foreign equity in DPC. If assets are sold, the advantage is that the buyer will not be saddled with the liabilities of DPC. The money thus realised will be first utilised to pay off the lenders' dues. The balance will be given to the equity owners," said sources in the lenders' consortium.

The lenders meeting will also consider whether to enforce the security and take charge of the assets.

This has been prompted by the refusal of Enron Corp which holds 65 per cent in DPC to sign the sponsors co-operation agreement which would have paved the way for due-diligence by prospective bidders.

On the other hand, it has accused the domestic financial institutions of conspiring to seize its equity.

If the lenders manage to take over DPC's assets, then the Enron company will be consequently reduced to a shell firm.

The meeting will also be crucial as the US-based Overseas Private Investment Corporation will spell out its stand on whether it agrees to the sale.

The three US-based companies Enron, General Electric and Bechtel which together hold an 85 per cent stake in DPC have decided to exit the 2,184 mw, $ 3 billion power project which was once touted as the showpiece of India's power reforms programme. This was due to a payments dispute with the Maharashtra State Electricity Board. The electricity board holds the remaining 15 per cent equity in the project.

The financial institutions and domestic banks which have an exposure of about Rs 62 billion to the company are trying to facilitate the sale.

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