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DPC due diligence could be further delayed

The due diligence process to acquire the 85 per cent stake of Enron, GE and Bechtel in the 2,184 mw Dabhol Power Corporation is yet to be finalised because of a disagreement between the promoters and bidders over opening a separate account for the payment of the proposed sale amount for DPC.

According to financial institutional sources, lenders have refused to pay the proposed sale amount directly to the promoters which the bidders want to be kept in an 'interest of trust and retention account'.

Sources said a majority of the seven DPC bidders were in favour of making sale payments in the escrow account, a proposal, which also has the backing of main lenders like IDBI so that existing promoters' liability such as penalty and interest could be shared jointly by the bidders.

However, sources said the proposal does not find favour with the stakeholders -- Enron, General Electric and Bechtel -- who want the sale proceeds to reach them directly.

The DPC promoters have made it clear that they need money to set up the data rooms in London so that the due diligence process could take off.

The opposition to the escrow account formula is so strong that the promoters have threatened that they could even refuse to sell their stake to the bidders, sources said.

Although three godowns have been hired to keep records numbering around 700 documents, they are yet to be opened.

The bidders namely, Gas Authority of India, BSES, the Tatas, Reliance, Gaz de France, British Gas and Royal Shell, have signed the expression of interest for the 85 per cent stake of Enron, GE and Bechtel in DPC are now insisting on starting the due diligence process as soon as possible.

Most of the bidders have deposited $100,000 with IDBI for the process.

UNI

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