CALCUTTA, India, Jan. 22 (UPI) -- The sale of bankrupt Enron Corp.'s 65 percent stake in its $2.9 billion Indian subsidiary, Dabhol Power Company, took a decisive turn Monday when its lenders announced their selling terms and a detailed four-month schedule for bidders.
According to an announcement made by two lenders, IDBI, a leading a consortium of Indian lenders, and the U.S.-based Overseas Private Investment Corporation, March 14 has been set as the deadline for submitting bids for the 2,184 megawatt gas-fired power plant. The same deadline has been set for DPC's adjacent liquefied natural gas facility located 150 miles south of Bombay.
Prospective bidders must pay a $100,000 non-refundable deposit and sign a confidentiality agreement according to the terms set out by the lenders.
IDBI said that the sell-off process formally kicked off Tuesday with the release of advertisements in major Indian newspapers inviting responses from interested bidders.
Financial advisers will be appointed on Friday and due diligence will begin Jan. 31 in London, with only four days for the bidders to complete due diligence. Two pre-bid conferences will follow, one by the end of the month and the other in the middle of February.
The lenders have stipulated that bids must be submitted by March 14 and the bids will open on March 15. Two companies will be short listed for the final bid on March 31. The lenders will announce the winning bidder by April 15.
The lenders added that a data room will be set up in London where each qualified bidder will be given three days to carry out due diligence, followed by a two-day visit to the plant.
The data room will provide operating data, information on the status of the nearly completed Phase II and historical records detailing construction of the plant, which is the largest foreign private investment ever in India, the lenders said.
The IDBI and OPIC will oversee the bidding process.
Meanwhile, the DPC sell-off has taken an interesting turn in the past week. Initially, a number of suitors, including the AES Corp. of the United States, expressed interest just as Enron announced its decision to exit from DPC June last year. But as the Enron-DPC saga got murkier many quickly pulled out. Eventually only two local utility companies, Tata Power and BSES, remained in the fray.
It appears that DPC has suddenly aroused the interests of a few foreign as well as local bidders, however. According to PP Vora, Chairman of IDBI, six major companies -- three foreign and three Indian -- have expressed interest in bidding for the plant, which has lain idle since June.
Royal Dutch/Shell, the European oil major TotalFinaElf and French state-owned Gaz de France are the three potential foreign bidders, while Gas Authority of India Ltd, a state-run gas marketer, recently joined the race.
But despite the best efforts of the lenders to expedite the sell-off process, hurdles keep cropping up. Reportedly, Tata Power and BSES, which were present in the meeting convened by IDBI to discuss Enron's confidentiality pacts on Saturday, vehemently opposed the condition of the $100,000 non-refundable "earnest money deposit" as the prerequisite for signing the confidentiality agreement.
Another issue, which the two companies have objected to, is Enron's insistence on working under American law. According to sources, Tata Power and BSES have been insisting that the agreement should be based on Indian laws since DPC is a domestic company while Enron has been pressing for U.S. law.
Although both Tata Power and BSES denied to comment on these two issues, a Tata Power spokesperson said that all bidders are currently evaluating the bidding terms carefully, "including the earnest money deposit clause." He added that in the wake of the ongoing investigations against Enron in the United States, "it is natural that Indian bidders would prefer to be governed by Indian law."
Yet another issue that is coming in the way of a smooth sell-off is the removal of e-chips, documents and coded CDs from the DPC site by Enron (reported by UPI) last week.
Meanwhile, DPC admitted that e-chips and coded CDS have been removed but justified its actions as security related in its representation to the Bombay high court on Monday.
"The e-chips and coded CDs are in India and the company is willing to produce them to any authority," said a DPC release.
