NARCL makes Rs 1,003 crore offer for Meenakshi Energy

25 Oct 2022 , 02:16 PM

According to news reports, Hyderabad-based thermal power business Meenakshi Energy reported that the National Asset Reconstruction Company (NARCL) has made a revised, better offer for Meenakshi Energy of Rs1,003 crore.

According to the persons mentioned by ET, the government-sponsored NARCL's amended offer, which it submitted last week in response to a request from the company's lenders, is 11% higher than its initial offer.

While the corporate resolution was in its final stages a fortnight ago, NARCL made a binding offer of Rs900 crore for Meenakshi Energy.

Three companies are competing to buy the struggling power company: Vedanta, sponsored by Anil Agarwal, Jindal Power, promoted by Naveen Jindal, and a consortium headed by Prudent ARC.

EY Restructuring LLP-supported resolution expert Ravi Sankar Devarakonda has asked the three bidders for updated, enhanced resolution plans by the first week of November.

A 15% advance payment would be required as part of NARCL's offer of Rs1,003 crore, and the remaining amount would be paid in the form of security receipts upon the recovery of the outstanding debt from the defaulting enterprise.

The government promises to pay any gap in the recovery that NARCL has promised.

A total of Rs3,944 crore in acknowledged claims from financial creditors, including Rs166 crore from India Power Corporation (IPCL) and Rs159 crore from Devi Trading & Holding, are included. NARCL has not made a proposal to buy loans from these two businesses.

Thus, if accepted, the amended offer, which is based on the Rs3,619 crore in loans that are listed on the records of government-owned banks, would result in a 28% recovery for the lenders.

According to the information memorandum, IPCL has given Meenakshi Energy a corporate guarantee.

According to the information memo distributed by the resolution professional, SBICAP Trustee holds 95% of the equity in Meenakshi Energy at the direction of the lenders after they instructed the trustee company to invoke shares held by IPCL and Meenakshi Energy & Infrastructure Holdings (collectively referred to as shareholders).

Following a failure to make loan payments between December 2017 and January 2018, the shares were exercised. According to the information memorandum, the shareholders have filed a lawsuit against the invocation of their equity shares with the Hyderabad High Court.

A long-term power purchase deal between Meenakshi Energy and Bangladesh was cancelled in November 2021.

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