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Promoters enter fray for Coastal Energen power, offer up to Rs 3,500 cr

SBI-led lenders had taken over the firm after it failed to repay Rs 6,000 cr; while Adani emerged as final bidder for the project, the I-T-tainted ETA Star Group now offers to buy its project back

Shreya Jai & T E Narasimhan  |  New Delhi/Chennai 

power, thermal
Representative Image

The Ahmed Buhari-promoted Coal and Oil group which once owned the 1,200-Mw venture in Chennai has bid for the project. Sources said the offer made by the company is around Rs 2,500-3,000 crore, and entails a bank haircut of around 50 per cent.

The lenders, led by SBI, took majority control in the Tamil Nadu-based company after it failed to repay its Rs 6,000 crore debt. The Adani Group and Edelweiss Group had made offers for the project. While Edelweiss bowed out of the bidding process, Adani emerged as the final bidder. Business Standard reported last week that the promoter might join the race.

ALSO READ: Adani Group may pick 51% lenders' stake in TN's power firm Coastal Energen

Ahmed Buhari is the son of B S Abdur Rahman, the vice-chairman of the ETA Star Group, which has a presence in real estate and trading in the UAE. In January 2017, raids were carried out in 74 places across the country which were connected to Buhari group and ETA Star group of These included 49 locations in Chennai, two premises of Pvt Ltd, the power generating flagship firm of the Coal and Oil Group, and several other places, as the tax department suspected large-scale evasion by the groups.

operates on imported coal procured from open market sources. The 558-Mw power generated from Unit-1 of the project has tied with Tamil Nadu-owned discom Tangedco at a levelised tariff of Rs 4.69/kwh for 15 years ending September 30, 2028. The project's second unit doesn't have a long-term power purchase agreement (PPA).

The company had earlier converted a part of its outstanding loans and facilities to equity shares, which constitute 51 per cent of the total equity of the company. Of this, holds around 18.54 per cent and Punjab National Bank has 5.77 per cent. Other lenders, including Central Bank of India, Indian Overseas Bank, Indian Bank and UCO Bank, have less than 5 per cent stake in the company.

“The company has been facing challenges due to non-availability of PPAs at remunerative tariffs and has not been able to service its obligations under the credit facilities provided by the lenders,” Capital Markets which called for bids on behalf of SBI, said earlier in its offer document.

First Published: Sun, January 20 2019. 16:04 IST