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Dabhol lenders seek legal advice on asset takeover

BS Corporate Bureau

Lenders to the troubled Dabhol Power Company have sought the advice of their lawyers, Amarchand Mangaldas and Clifford Chance, on the modalities of a possible takeover of the firm's assets.

The decision was taken at a meeting of the domestic and foreign lenders in Mumbai on Monday.

The domestic lenders are being advised by Amarchand Mangaldas while the offshore lenders are being represented by Clifford Chance.

"There may be no choice but to enforce the security and take over the assets of the company. Legal advice has been sought and a final decision will be taken in the next two days," sources in the lenders consortium told Business Standard.

The earlier decision of selling the 85 per cent stake in DPC held by Enron, General Electric and Bechtel has been shelved because Enron Mauritius had filed for bankruptcy under Chapter 11 in the US courts.

Enron Mauritius is one of the companies through which bankrupt US energy company Enron Corp had routed its stake in DPC.

The creditors of Enron now have first charge over the equity held by it in various companies. This has prompted the rethink on the lenders' part.

The lenders also met officials of BSES and Reliance, two of the parties to have submitted expressions of interest in buying the equity of the three US-based firms.

BSES and Reliance had earlier sought refund of the earnest money of $1,00,000, submitted along with their expressions of interest.

Counter-guarantee

DPC has invoked counter-guarantee of about Rs 6 billion for the five-month period from September 2001 to January 2002. The company informed the Centre and the Maharashtra government of this last week. This is the third time the company has invoked the counter-guarantee.

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