Government-owned Power Finance Corporation (PFC) and REC, which have jointly submitted a plan, have asked for a week to participate in the bidding process, two people familiar with the development said.
Lenders of Lanco Amarkantak had decided to hold the auction on Friday (November 25) among the three restructuring bidders – Reliance Industries, Adani Power and the PFC-REC combine – 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 Adani Group – will compete directly against each other for an asset.
PFC and REC together hold 41% of the thermal power company’s debt in bankruptcy proceedings.
With 41% of the debt, the duo can control the resolution process. Under the Bankruptcy and Bankruptcy Code, for any resolution to be approved, at least 66% of the creditors by value of the debt must agree. This means that a block with 34% or more debt can block a resolution.
The PFC-REC plant is interested in acquiring the company. Their bid for Lanco Amarkantak may be in line with the resolution passed by sovereign lenders to set up a power asset management company (PAMC) to buy stressed power sector assets. PFC and REC are proposed to hold 50% stake each in PAMC.
“The acquisition of common stressed assets by PAMC, where both REC and PFC have exposure, will have a synergistic effect due to the pooling of resources,” PFC stated.
Adani Power has offered Rs 2,950 crore for the asset, of which Rs 1,800 crore will be paid upfront and the rest spread over five years, while Reliance has come up with an upfront payment plan of Rs 2,000 crore, as reported by ET.
The PFC-REC pair had offered ₹3,870 crore, but the net present value of the offer is lower as the payment is spread over 10-12 years. The base price for the auction will be ₹2,950 crore – the amount offered by the highest bidder Adani Power.
Saurabh Kumar Tikmani, the KPMG-backed restructuring professional, has admitted claims worth ₹14,632 crore from 17 creditors.
Future Retail and SKS Power are among the other distressed assets that Reliance and Adani Group are likely to compete for. Both have submitted expressions of interest to these two companies, although it is unclear whether either will submit a firm offer.
Lanco operates a coal-based thermal power project along the Korba-Champa state highway in Chhattisgarh. It commissioned the first phase, comprising two units of 300 megawatts each, which supply electricity to Madhya Pradesh, Haryana and the home state.