Adani Power given backdoor entry to bidding process, claims former promoter of Coastal Energen

Former promoters of Chennai power company Coastal Energen challenge the resolution plan submitted by the consortium of Dickey Alternate Investment Trust (DAIT) and Adani Power, according to media reports. They argue that there were irregularities in the way the plan was approved by lenders.

The crux of the argument is that Adani Power was unfairly allowed to participate in the bidding process. Adani’s initial bid was rejected because it was submitted late. However, Adani was later allowed to team up with DAIT to submit a new bid.

The former promoters say that the rules of the bidding process were not followed. They say that companies are only allowed to join a consortium at the beginning of the bidding process, not later on. They also point out that DAIT had already submitted its own bid before joining the consortium with Adani.

The former promoters also allege that there may have been a conflict of interest on the part of the committee that approved the resolution plan.

The former promoters had proposed a one-time settlement offer to the lenders in order to avoid insolvency. Their offer was for Rs 5,847 crore, which included giving the lenders a 15% ownership stake in the company.

Coastal Energen is in bankruptcy process since February 2022. The company owes Rs 2,000 crore to lenders.

Coastal Energen had taken loans from a consortium of banks led by State Bank of India for setting up of a 1200 MW coal-fired thermal power plant in Tuticorin, Tamil Nadu. However, delays choked progress, and costs surged from Rs 4,297 crore to a staggering Rs 7,870 crore. Unable to stay afloat, Coastal Energen found itself dragged to the National Company Law Tribunal in February 2022.

The Committee of Creditors has on December 23rd approved the resolution plan submitted by a consortium led by Adani Power for Coastal Energen, the former said in an exchange filing.

Also See: Lenders of Coastal Energen approves Adani Power resolution plan