Coastal Energen promoters reiterate commitment to one-time settlement

The promoters of Coastal Energen have reiterated their earlier settlement proposal of Rs 5,847 crore, significantly higher than Adani’s offer of Rs 3,440 crore.

The company said in a statement that the total financial commitment of the promoters to the project is Rs 7,097 crore, including Rs 5,847 crore offered as settlement to banks (Rs 2,200 crore already settled) and Rs 1,259 crore equity progressively invested since 2006.

The company said it has been an 18-year journey of investment and the promoters are committed to a fair one-time settlement with the consortium of banks and a fair and equitable process that allows them to manage and rebuild the plant.

In February 2022, the State Bank of India (SBI) and a 13-member banking consortium initiated National Company Law Tribunal (NCLT) proceedings against Coastal Energen due to defaults on a loan totalling Rs 6,296 crore. This amount had escalated from Rs 3,323 crore due to a 48-month bank funding delay amounting to Rs 2,600 crore, retrospective taxes of Rs 470 crore, and a scope increase of Rs 400 crore due to an increase in capacity of the project from 1,080 megawatts (MW) to 1,200 MW. Around Rs 1,600 crore of working capital assessed by banks was also not made available to the company.

While continuing to engage with the promoters of Coastal Energen, the Committee of Creditors (CoC) invited an expression of interest (EOI) through the Corporate Insolvency Resolution Process (CIRP) on February 10, 2023. While there were interested parties like Jindal Steel Power Limited, Sherisha Technologies, and Dicky Alternative Investment Trusts (DAIT), Adani Power’s bid was not shortlisted and was later rejected in July 2023. Then in October 2023, Adani returned as a joint venture partner of DAIT to make a backdoor entry as a consortium partner. This was in the context of DAIT not meeting financial and experience criteria.

"This raises serious questions about the compliance of the DAIT-Adani consortium’s bids with Insolvency and Bankruptcy Code (IBC) guidelines," the statement said.