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Global lenders may nod DPC notice to MSEB

S Ravindran

Global lenders are looking at the option of authorising the Enron-promoted Dabhol Power Company to serve the final termination notice to the Maharashtra State Electricity Board.

Domestic lenders led by the Industrial Development Bank of India had obtained a decree from the Bombay high court on November 9, restraining DPC from serving a final termination notice.

The overseas lenders will seek the opinion of their lawyers, White & Case, on the feasibility of such a move and then take a final decision.

The steering committee of the lenders comprising Credit Suisse First Boston, Bank of America, Citibank, OPIC, ANZ Investment Bank and the Industrial Development Bank of India are planning to convene a meeting in London next week to discuss the issue.

"This will figure on the agenda at the meeting for which an in-principle approval has been obtained from all the parties. However, a final decision on whether to go ahead with the meeting will be taken shortly," sources in the lenders' consortium said.

The domestic lenders will oppose the foreign lenders' move tooth and nail at the proposed meeting.

The November 9 order is only a temporary reprieve as the injunction is valid till December 17. The earlier deadline for serving the notice was November 19.

In the event of the final termination notice being issued and the DPC securing a favourable verdict in the London Court of Arbitration, the domestic lenders stand to lose as their liabilities are not covered by the counter guarantee issued by the Union government. Foreign lenders on the other hand are covered by the counter guarantee.

Domestic financial institutions are also expected to brief foreign lenders on the outcome of the deliberations with Tata Power and BSES at Singapore.

The two parties have evinced interest in picking up a 85 per cent stake in DPC and are planning to enter into confidentiality agreements before they begin formal due diligence.

Enron representatives are also expected to attend the meet and brief the lenders on the fallout of the global takeover of the energy major by the US company, Dynegy.

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