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Lanco Infratech on Monday announced that it successfully completed the sell-off of its Udupi power plant to Adani Power, making it the largest acquisition in India in the thermal power space.
The Rs 6,300-crore transaction was announced in August 2014, as part of Lanco’s debt restructuring strategy. But the two companies ended in a legal battle after the deal could not meet the closure deadline of December 2014. With the acquisition of the power plant, Adani’s generation capacity stands at 10440 mw.
The Delhi High Court in January directed the two companies to arbitrate the dispute after Adani had moved the court seeking to restrain Lanco and its representatives from selling its shares in Udupi Power Corporation Ltd or creating any third party interest in the unit, saying it would be a violation of a share purchase agreement (SPA) between them. But the deal was completed without commencement of arbitration proceedings.
The power plant has two 600 Mw imported coal based power unit in Karnataka’s Udupi district. It is the country’s first independent power project, which is based on 100 per cent imported coal with a captive jetty of four million tonnes a year and an external coal handling system in the new Mangalore Port Trust. The plant’s facility can be expanded as Udupi has already signed an agreement with the Karnataka government for further expansion of the capacity by 1,320 Mw, said a Lanco statement today.
Following the completion of the transaction, Lanco Infratech has realised the enterprise value of around Rs 6,300 crore. “The deal helped Lanco to reduce its debt position — long-term and short term debt now at Rs 4,275 crore and Rs 2,147, respectively — and infuse capital in other projects including Lanco Amarkantak Power,” said the statement.
Adani had earlier contended that the conditions of the SPA required Lanco to provide consent to the transaction from all of its secured lenders as well as a consent to release the shares of Udupi pledged with them. Lanco provided “purported consents” from only seven out of 18 secured lenders despite.
