As per Adani latest news, the committee of creditors of the Chennai-based power generation firm Coastal Energen has given its approval for the resolution plan of the project, which was submitted by the Adani Power-led This was confirmed by some of the internal sources from the Adani Group. This is yet another huge venture for the Gautam Adani-led subsidiary. It will provide the company with scope for further expanding its territories and working on the different projects that it is currently planning to execute in the upcoming years.
The Offer Placed by Adani Power:
The Adani Power Limited has recently received a Letter of Intent (LOI) from the Resolution Professional (RP) on 23rd December 2023. The implementation of the stated resolution plan is subject to the terms and conditions of the LOI and the requisite approvals from NCLT or any other regulatory bodies as applicable. The top officials of Adani Power stated this in a regulatory filing session. This marks a huge step for Adani Power, which has been continuously working on India’s energy and power sectors. The company is one of the major distributors of power in different regions of India.
A Brief Overview of Coastal Energen:
Coastal Energen Private Limited is the power-generating flagship company of the Coal and Oil group. The company was supposed to set up a 1,200 MW coal-fired thermal power plant in the Tuticorin district of Tamil Nadu. A consortium of various national banks led by the State Bank of India (SBI) had offered huge loans to Coastal Energen to set up the thermal power plant in Tuticorin. This was seen as a noble move by the company to increase the power supply in India. A lot of other companies also showed their support and appreciation towards Coastal Energen for setting up such an extraordinary venture in India. Coal and Oil Group promotes the operations of the company through Mutiara Energy Holdings Limited, Mauritius, and Precious Energy Holdings Limited, which is a Dubai-based energy conglomerate.
What Caused Coastal Energen’s Project Operations to Rely On Other Companies for The Implementation of Its Project?
Coastal Energen already operates two different 600 MW units in Tamil Nadu; it has an existing power purchase agreement with Tamil Nadu Generation and Distribution Corp that extends till September 2028 for one of its units. However, there were a lot of delays and cost overruns during the project’s operations, which caused the project cost to increase from INR 4,297 crore to INR 7,870 crore. This included a debt of INR 6,296 crore and an equity of INR 1,574 crore. The original cost was INR 4,297 crore, which included a debt of INR 3,323 crore. This caused a lot of financial difficulties for the company. It was no longer able to fulfill its obligations to the lenders. This provided the company with a major setback. The various operations of the project also came to a halt because of the need for more available funds for implementing the project.
So, Coastal Energen was left with no other option but to depend on other companies in the power sector to implement the project. As stated in Adani latest news, in February 2022, the Chennai bench of the National Company Law Tribunal admitted to the insolvency application which was filed by SBI against Coastal Energen. Numerous creditors of the Chennai-based company had started submitting claims of over INR 12,000 crore.
How Did Adani Power Win the Bid for The Project?
Adani Power was not the only company that was willing to acquire the project. There were a lot of other companies as well, which were also in the race to acquire Coastal Energen. Some of the popular names include Torrent Power, Vedanta, Jindal Power, and Dickey Alternative Investment Fund. The debt-ridden company Mutiara & Precious Energy Holdings proposed a INR 5,847 crore settlement package to lenders in October 2023, which included a 15% ownership stake. However, it was Adani Power that actually emerged victorious.
The bid placed by Adani Power, which is around INR 3,500 crore, is lower than that of the promoters. However, the company still ended up winning the bid. This is primarily because the proposal submitted by Adani Power resonated strongly with the Committee of the Creditors. It was also Adani’s proven track record in constructing thermal power plants, their financial strength, and their vision for the future of Coastal Energen which actually caused the company to win the project.
Conclusion:
Adani Power’s offer for Chennai-based Coastal Energen reflects the company’s hold in the power sector. It also highlights Adani Group’s willingness to expand its boundaries in the power sector further. For more such Adani latest news, keep following us.
