NCLT approves Vedanta’s bid to acquire Meenakshi Energy – EQ Mag

The resolution plan offers to pay Rs 1,440 crore to creditors of Meenakshi Energy, which owes over Rs 4,625 crore to its financial as well as operational creditors. Of the Rs 4,625 crore, Rs 3,945 crore was financial debt. Out of the total consideration Rs 312 crore will be paid upfront and balance Rs 1,128 crore will be in the form of secured unlisted non-convertible debentures issued by Meenakshi Energy Limited to the Financial Creditors to be repaid in five equal instalments over a period of 5 years starting from the end of 2nd year.

The average liquidation value of the assets of Meenakshi Energy has been arrived at Rs. 1,100 Crores while the average fair value arrived was Rs 2,150 crores. The Committee of Creditors had earlier approved the resolution plan submitted by Vedanta Ltd with a vote share of 94.96%. Resolution plan submitted by Vedanta Ltd was preferred over other two bids by Jindal Power Limited and Prudent ARC Limited & Vizag Minerals and Logistics Private Limited (PAL-VMML).

The previous experience of Vedanta and Jindal was taken into consideration and the plan submitted by the PAL-VMML was considered as not viable or feasible. In the 44th meeting of CoC held on January 4, 2023, the resolution plan by Vedanta was discussed which was revised to Rs. 1440 crores from Rs 650 crores and Jindal’s offer of revised plan for Rs 1344 crores. PAL-VMLL did not submit a revised financial offer.

Meenakshi Energy Limited is a 1000 MW power plant incorporated on 21st August 1996 and located at Nellore district of Andhra Pradesh, India. Meenakshi Energy is a 1000 MW coal-based power plant located at Nellore, Andhra Pradesh. Phase I of 300 MW (2*150 MW – Unit 1 & 2) is completed. Remaining Phase II of 700 MW (2*350 MW – Unit 3 & 4) is pending to be tested and declared COD (Commercial Operational Date).

Vedanta has said that it will for now operate 1000 MW of Meenakshi Energy Limited as independent power producer to carter to the needs of the market by entering into short- or medium-term power purchasing agreement and by supplying power to merchants. The acquisition will enhance the group’s portfolio in power, Vedanta Ltd has said. The company was admitted under Corporate Insolvency Resolution Process in terms of the Insolvency and Bankruptcy Code, 2016 and the insolvency proceedings were commenced on 7th November, 2019. State Bank of India had initiated the insolvency proceedings against the company for defaulting on a payment of Rs 1,700 crore.