lanco: Epic Ambani versus Adani clash over a Lanco asset has been postponed for now | Rare Techy
Government-owned Power Finance Corporation (PFC) and REC, which have jointly submitted a plan, have sought a week to participate in the auction process, said two people aware of the development.
Lender Lanco Amarkantak has passed a resolution to hold an auction on Friday (November 25) among three resolution applicants – Reliance Industries, Adani Power and PFC-REC joined – to identify the highest bidder, as reported by ET on November 23. This will be the first time that two of the country’s largest corporate houses – Reliance and the Adani Group – will compete directly for one asset.
Combined PFC and REC hold 41% of the debt of thermal power companies that are undergoing insolvency proceedings.
With 41% debt, the duo can control the resolution process. According to the Insolvency and Bankruptcy Code, to approve any resolution, at least 66% of the lenders by the value of the debt must agree. That means a single block with 34% or more debt can block the resolution.
Combined PFC-REC wants to take over the company. Their bid for Lanco Amarkantak can be in line with the resolution passed by the lenders-running the conditions to create a power asset management company (PAMC) to buy stressed assets in the power sector. PFC and REC are proposed to hold 50% stake each in PAMC.
“Acquisition of common stressed assets by PAMC, where both REC and PFC have exposure, will have a synergistic effect due to pooling resources,” PFC had stated.
Adani Power has offered ₹ 2,950 crore for the asset, of which ₹ 1,800 crore will be paid upfront and the rest supported over five years, while Reliance has entered into an upfront payment plan of ₹ 2,000 crore, as reported by ET.
The PFC-REC pairing had offered ₹ 3,870 crore, but the net present value of the offer was lower since the repayments were staggered over 10-12 years. The base price for the auction was ₹2,950 crore – the amount offered by the highest bidder, Adani Power.
Saurabh Kumar Tikmani, a resolution professional backed by KPMG, has claimed ₹ 14,632 crore of claims from 17 lenders.
Retail Future and SKS Power are among the other distressed assets that Reliance and the Adani Group are likely to compete with. Both have submitted expressions of interest for these two companies, although it is not clear whether either will submit a firm offer.
Lanco operates a coal-based thermal power project along the Korba-Champa state highway in Chhattisgarh. It has already completed the first phase, consisting of two units of 300 megawatts each, which will supply electricity to Madhya Pradesh, Haryana and the home state.