27 February 2019: State-owned Bank of Baroda (BoB) has floated an expression (EoI) of interest to sell its non performing assets worth over Rs 5,928 crore, including its Rs 1,838 crore loan to cash-strapped Reliance Communications.
The bank has identified loans to 49 companies, including two power firms run by GVK (totalling Rs 357 crore), GMR Chhattisgarh Energy Ltd (Rs 218 crore), and Monnet Power Company (Rs 199 crore), for sale.
According to the offer, interested asset reconstruction companies (ARCs), banks, non-banking financial companies (NBFCs), and financial investors were allowed to conduct due diligence of these assets from February 25. Interested buyers will have to submit indicative prices at which they want to buy these assets.
BoB’s largest asset for sale in this list is the loan to RCom. The bank’s decision to put its assets in RCom on the block comes after the board of RCom early in February decided to opt for debt resolution through the National Company Law Tribunal (NCLT).
Observers, however, point out that sale of this loan could be a challenge as an interested buyer would ask for a substantial discount, especially as the company’s bid to sell its towers, fibre and spectrum assets has failed.
RCom’s international bonds worth $300 million have been rated D (standing for default) and are priced at a discount of over 75 per cent of the par value. Many observers say this could be the benchmark for potential bidders for the BoB loan.