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Tata Power Seeks UP Transco Sale Via Swiss Challenge Method

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By on ENERGY

(T.E.T)

Tata Power NSE 0.36 % wants banks to use the Swiss challenge method for sale of South East UP Power Transmission Company, claiming it should be allowed to match the best offer because it had emerged as the highest bidder in a previous round, according to sources in the know. Tata had outbid  Adani  NSE -0.48 % and three other players, all of whom submitted bids on October 30.
However, banks set aside Tata’s earlier offer because of certain conditions unacceptable to them and are now considering a rebid, said sources.

Tata’s request may not be easy to implement as IBC regulations are silent on use of Swiss challenge as a method of bidding. Banks have sought legal opinion. Tata Power declined to comment.

According to the Swiss challenge method, the highest offer is used as the basis for conducting bidding. Competing bidders have to better the offer. However, the party that made the original offer gets to match the best bid.
Tata Power has bid for the company through its subsidiary Resurgent Power Ventures. Its offer of Rs. 3000 crore was the highest at the time it’s bid was made in October.

Vedanta group company Sterlite, REC PDCL and Power Grid Corporation of India had also submitted bids.

Resurgent Power Ventures is 26% owned by Tata Power. It’s other shareholders are ICICI Bank, State General Reserve Fund of Oman and Kuwait Investment Authority.

South East UP Power Transmission Company was admitted for IBC proceedings at National Company Law Tribunal (NCLT) after it defaulted on loans of Rs 3,700 crore to a group of lenders that includes Rural Electrification Corporation, Power Finance Corporation, Bank of India and Axis Bank.

The company went into financial trouble after its owner Grupo Isolux Corsan filed for bankruptcy in Spain.

An invitation to submit an expression of interest (EoI) to buy the company was issued by Deloitte on February 18, 2021. NCLT had earlier appointed Shailesh Verma of Deloitte as the company’s resolution professional.

The Madrid-based Isolux Corsan had won a 35-year concession to build and operate a power transmission network in Uttar Pradesh spanning 1,600 km in July 2011 .

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