NOCL lenders extend last date for Resolution Plan a day after hearing BPCL

PSU oil major had issue with land assets, submitted offer that was unacceptable to Committee of Creditors

The Committee of Creditors (CoC) of Nagarjuna Oil Corporation Ltd has decided to extend the last date of submission of Resolution Plans for the company, after two companies including Bharat Petroleum Corporation Ltd (BPCL) submitted their plan in a meeting held on Friday, March 23. The decision has been taken due to varioius reasons, including an aim to seek the highest value possible for the company, according to sources close to the development.

An advertisement published today (Saturday, March 24) on behalf of the company said, "The CoC in their meeting held on March 23, 2018, decided to invite bids afresh from all resolution applicants who have fulfilled EOI Criteria. The bid process flow documents and conditioners therein already shared remain unaltered." According to sources, there are seven to eight qualified bidders for the company.

The resolution plans complying with requirements of the Insolvency and Bankruptcy Code (IBC) should reach the Resolution Professional before March 31 evening.

As reported earlier, the bids from the two companies, BPCL and Citax Ventures, UK, were to open on Friday. Citax Ventures has been promoted by the former promoter of Singapore-based Netoil, which earlier attempted to take over NOCL stakes, but had failed in the process. However sources close to the development said BPCL was the only one to submit the bid security of Rs 100 million. CITAX Ventures did not submit bid security amount, so its bid was not considered by the CoC.

The Resolution Professional was not immediately available for comment.

While the bid amount was not known, sources said BPCL had an issue with the liquidation projected cost of around Rs 15 billion since it felt that out of the 2,100 acres with NOCL, only around 500 acres is owned by the company and the balance 1,600 acres belong to State Industries Promotion Corporation of Tamilnadu Ltd (Sipcot). If NOCL is liquidated, the land owned by Sipcot cannot be sold by the lenders.

Sources believes the land cost would be worth Rs 60 million at the most, while the old machineries would be worth another Rs 500-600 million.

"BPCL also informed the creditors that it is not interested in completing the outdated six-million-tonne refinery project, but it will implement projects in the oil and gas sector," said the source. It may be recalled that in 2013, oil and gas major Shell looked at this project along with ONGC but did not conclude it.

UK-based Citax Ventures, which is connected to Singapore-based Netoil (Singapore) (PTE), had earlier shown interest in investing around Rs 36 billion, but the deal had fallen through.

In August 2016, NOCL promoter Nagarjuna Oil Refinery had told the exchanges that various prospective investors, including public sector companies like Indian Oil, had sought information on NOCL's six-million-metric-tonnes-per-annum (mtpa) petroleum oil refinery project at Cuddalore, around 200 km south of Chennai. PSUs like HPCL, ONGC and foreign investors like Shell have also made moves to acquire NOCL, but none of these have fructified.

The resolution plan has to be selected and sent to NCLT by April 20, as per the recent amendments to the IBC and its Regulations.

Sources said the CoC felt BPCL's bid was too low and said they would have to call fresh bids if BPCL did not increase its offer to the lenders. BPCL took strong objection to this on the ground that other potential bidders would now know the details of its bid terms and would have an unfair advantage.

The project, for which the construction work started in 2009, had been partially completed in December 2011, when a cyclone and shortage of funds stopped work. The plant has the capabilities of meeting Euro VI requirements with some additions.