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Mining giant Vedanta has announced that it will be acquiring a 100% stake in the distressed power company Athena Chhattisgarh Power Ltd.
Athena Chhattisgarh Power is a 1200MW coal-based power plant based in the Jhanjgir Champa District, Chhattisgarh. The plant has two units of 600 MW each which are 80% and 30% complete, meaning that the plant hasn't been operational.
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In a public announcement, the Hyderabad Bench of NCLT had announced the commencement of liquidation procedures against the company, after its creditors had converted their debt to equity and filed a plea under IBC. From 13th May 2021, the liquidation process begins and interested parties were invited to submit their EoIs by 10th July 2021.
The auction for the debt-laden company had begun in December 2021 with a reserve price of Rs 1,503 crores. At the price, the liquidator did not receive any bids and was compelled to bring the price down. It is reported that the liquidator, Kumar Rajan had admitted claims of Rs 12,049 crores against the company.
Vedanta had initially made an offer of Rs 400 crores to be payable over 5 years but it was rejected by the majority of the lenders. In May 2022, the company outbid Jindal Power with a bid of approximately Rs 565 crores, significantly higher than the reserve price for the auction, Rs 485.3 crores.
The plant is a strategically beneficial acquisition as it is well connected to railways and highway networks & in close proximity to fuel and water sources. "The acquisition will fulfill the power requirement for Vedanta Aluminium Business and via vertical integration add synergies by providing a cost advantage pertaining to power consumption," Vedanta said in its regulatory filing.
Vedanta will be acquiring 100% of the company's paid-up capital for a consideration of Rs 564.67 crores to be paid in cash. The company expects the acquisition to be complete in this financial year.
The news of the thermal plant acquisition, which is a strategically beneficial acquisition for the company, failed to impress Dalal Street as the stock of Vedanta declined 1.62% in a day to close at Rs 224 per share.
Article by Aman Agarwal.
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