Adani Power, Jindal Power and Vedanta are among twelve companies that have expressed initial interest in acquiring distressed producer- GVK Power (Goindwal Sahib), said two people aware of the development.
GVK Power (Goindwal Sahib) was admitted for corporate insolvency by the Hyderabad bench of the National Company Law Tribunal last October on an application filed by Axis Bank.
Punjab State Power Corporation (PSPC), which has a power purchase agreement (PPA) with GVK Power (Goindwal Sahib), too submitted an expression of interest (EoI). Sherisha Technologies, a Refex Industries group entity, also gave an EoI, the persons quoted earlier said.
Megha Engineering & Infrastructure, Rashmi Metaliks, KLJ Resources, India Coke and Power, iLabs Investments, RKG Fund and Capri Global were among others who submitted EoIs, the people said.
Ravi Sethia, the resolution professional backed by KPMG, has admitted Rs 6,584 crore claims from twelve financial creditors, according to a disclosure made on the Insolvency and Bankruptcy Board of India website.
GVK Power and Infrastructure is the parent company of GVK Power (Goindwal Sahib). The RP did not respond to ET’s request for comments. GVK Power (Goindwal Sahib) operates two thermal power plants of 270 MW each in Punjab and partnered with Coal India for coal supply.
In October 2021, the state government terminated the PPA with GVK citing high tariffs charged by the power producer. The PPA’s termination was fulfilling an election promise by the then Congress government.
The Punjab government had signed the PPA with GVK Power when the Shiromani Akali Dal–BJP combine was in power earlier. The cancellation resulted in a series of litigations between the company and the state government.
In April 2021, Varde Partners, backed by Aditya Birla Asset Reconstruction Co acquired Rs 170 crore principal loans of the distressed power producer at a Swiss auction. The ARC acquired the loans at 19 paise on rupee principal, one of the persons said.
Since 2017 the GVK Group has been negotiating a one-time settlement of loans with lenders. Banks also signed an inter-creditor agreement. However, talks remained inconclusive over adispute on the settlement amount.
Later, in 2019, the company offered a settlement between 27-28 paise on a rupee but the negotiations came to a halt due to the outbreak of Covid-19.
At that time, the settlement offer to lenders was to be funded by Deutsche Bank (DB), a secured senior creditor who had invested Rs 300 crore in bonds of the power company. In July 2020, local lenders decided to distribute among themselves Rs 293 crore from a trust and retention account (TRA).
This was contested by IDBI Trusteeship — the trustee of bonds held by DB. Subsequently, local banks and DB decided to amicably settle the dispute of sharing the TRA money, as reported by ET on August 21, 2020.
