Adani, Vedanta in race to buy Lanco plant

Adani, Vedanta in race to buy Lanco plant

ADANI, VEDANTA IN RACE TO BUY LANCO PLANT

Adani Group and Vedanta (NSE 1.95 %) are competing to acquire Lanco (NSE 0.65 %) Amarkantak power plant located in the mine-rich Korba area of Chhattisgarh after it was admitted for insolvency proceedings by the National Company Law Tribunal (NCLT) last year, according to people aware of the matter.

Both parties are conducting due diligence on the power plant, which has 600 MW of operational thermal power capacity, 1,320 MW of under-construction capacity, and another 1,320 MW at the planning stage, after expression for interest was invited in December; neither has made a financial offer yet, according to the people. Sources also said at least one more party, a Singapore-based player, could join the bidding process.

The Adani Group did not respond to ET’s query on this matter. Vedanta Group, which is believed to have expressed interest through its transmission arm Sterlite Power Transmission, said, “As a company policy, we do not comment on market opportunities, which we evaluate in the normal course of business”.

The plant is housed in a special purpose vehicle (SPV), which took rs 12,000 crore of debt from banks but was unable to service it due to the financial troubles of the parent company, Lanco Group. The Lanco Group has been struggling with mounting losses and muted cash flows and tried to sell assets to repay debt but could not succeed.

The SPV, Lanco Amarkantak Power, was dragged to the NCLT over a Rs 800-crore loan default by Axis Bank. Lanco initially resisted the insolvency proceedings on the grounds that they were filed under a now defunct RBI circular of February 12, 2018. The circular instructed banks to initiate insolvency proceedings against companies within 30 days of them defaulting on a loan. It was quashed by the Supreme Court as it was thought to be harsh on borrowers.

 

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