Lenders have chosen Vedanta's offer of Rs 2,800 crore for a financially-stressed Lanco power unit, to put to a vote after its offer was declared higher than that of rival bidder iLabs Group, as per sources.
Vedanta and iLabs Group were the only two bidders under the Insolvency and Bankruptcy Code (IBC) provisions for the stressed thermal power company Lanco Amarkantak that owns two operating power plants in Chhattisgarh and four that are under construction.
Sources said there have been hectic parleys with the bidders who had initially quoted 'lowball' numbers to take over the company. Several months of negotiations interrupted by a Covid wave have resulted in the current offers that were finally considered.
A consortium of 14 banks and financial institutions are owed Rs 14,000 crore by the stressed power company. They include Axis Bank, LIC, Edelweiss ARC, Power Finance Corporation, Canara Bank and Punjab National Bank, among others.
For Vedanta's offer to succeed, two-thirds of the lenders have to vote in its favour, as per IBC rules.
Vedanta and Lanco Amarkantak Power's resolution professional Saurabh Tikmani did not respond. "The offer only provides 20% recovery, which is quite low. Lenders will have to examine other options including a re-bid if the requisite votes are not garnered," an executive familiar with deliberations between the lenders said on condition of anonymity.
However, one of the sources said Vedanta had offered to make the entire payment upfront and the offer has to be seen in the context of investors' preference for green energy and comparable offers for stressed thermal power companies.
As per a report of March 9 that Adani had made an offer of Rs 2,600 crore for Essar Power MP, which has debt of Rs 12,000 crore. That offer was ultimately accepted by lenders after Adani sweetened the deal terms. Similarly, Jindal India Thermal Power's lenders had accepted an offer of Rs 2,500 crore from the company's promoters to settle its debt under RBI's one-time settlement scheme.
Jindal India Thermal Power had a debt of Rs 7,900 crore. Essar Power MP and Jindal India Thermal Power have power generation capacities of 1,200 megawatts each.
Lanco Amarkantak Power was incorporated in February 2001 and has coal-fired thermal power units on 1,337 acres of land near Pathadivillage on the Korba-Champa state highway in Chhattisgarh.
The company has two units of 300 MW each that currently supply electricity to Madhya Pradesh, Haryana and Chhattisgarh. The second phase of two units of 660 MW each has been delayed beyond the targeted commissioning in 2016-17. Work on the third phase to add two more units of 660 MW each has not started.
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