National Asset Reconstruction Company of India (NARCL), the government-promoted bad bank, has given lenders of Meenakshi Energy a Rs 900 crore binding offer to acquire its debt, said two people aware of the development.
The thermal power company promoted by Hemant Kanoria and his family entered corporate insolvency in November 2019. Resolution professional Ravi Sankar Devarakonda, backed by EY Restructuring LLP, has received resolution plans from Vedanta, Naveen Jindal-promoted Jindal Power and Prudent Asset Reconstruction Company, one of the people said. All three offers are under Rs 900 crore, with the payment staggered over 7-10 years, the same person said.
NARCL gave a binding offer to the lenders two weeks ago. The loan auction process starts only after all the lenders get approval from their respective credit committees, the people said.
Meenakshi Energy’s project cost is estimated at Rs 7,583 crore, which includes debt of Rs 3,473 crore and an equity contribution of Rs 4,110 crore, according to an information memorandum circulated by the resolution professional. India Power Corp has provided a corporate guarantee for Meenakshi Energy. India Power Corporation is owned by Aksara Commercial Pvt Ltd, a holding company of promoters.
The total admitted claims of financial creditors were Rs 3,944 crore, which include Rs 166 crore from India Power and Rs 159 crore from Devi Trading & Holding Pvt Ltd. NARCL has not offered to acquire loans from these two companies.
The Rs 900 crore offer it has made is on Rs 3,619 crore of loans which are on the books of government-owned banks, and it equates to a 25% recovery for the lenders, if accepted.
The offer from NARCL, the asset reconstruction company owned by government-owned banks, involves a 15:85 structure — 15% as upfront payment and the remaining in security receipts that would be redeemed as it recovers money from the defaulting company. The shortfall in the recovery promised by NARCL is guaranteed by the central government.
The project has two phases: phase one has two units of 150 MW each and phase has two of 350 MW each. Phase one is dependent on imported coal for production and is operational, while Phase two is commissioned but not operational. Phase two is dependent on both domestic and imported coal. The power generating units are located adjacent to Adani’s Krishnapatnam port.
Meenakshi Energy had a long-term power purchase agreement with Bangladesh, but it was terminated in November 2021.
