Adani Power: KSK lenders to sell both arms of company to Medha Servo Drives

Lenders have decided to sell two key ancillary companies of KSK Mahanadi Power to Medha Servo Drives, a move seen as a setback for Adani Power, the highest bidder for the thermal power company which is undergoing insolvency proceedings, people familiar with the matter said.

Raigarh Champa Rail Infrastructure and KSK Water Infrastructure are the two ancillary companies essential for the operation of the 1,800 megawatt plant.

Lenders said Medha Servo was chosen because he made the highest bid for the two ancillary companies. “He offered to pay almost all of the lenders’ dues and thus received the highest vote required,” one of the people said.

For the plan to be approved, at least 66% of creditors must vote in favour. The plan now awaits approval from the National Company Law Tribunal (NCLT).

Adani Power, which has made proposals to the Fed on how it could proceed after raising Rs 27 billion in September for the parent company, was also in the running for Raigarh Champa Rail (used for transporting coal) and KSK Water. Vedanta and Jindal Power were the other companies keen to acquire the ancillary companies.

The power plant’s effectiveness will largely depend on the support of these two SPVs (special purpose vehicles). Since the company is under the jurisdiction of the bankruptcy court, there is an agreement between the two SPVs and the power company. However, the contours of the agreement could change when new owners are found, the people cited above said.
Medha Servo and Venkata Chalam Varanasi, the resolution professionals of KSK Water and Champa Rail, did not respond to ET’s request for comment. The RP has admitted Rs 878 crore and Rs 544 crore respectively in lender claims, according to the company’s website.

KSK Mahanadi Power’s creditors have received 10 financial offers. Other bidders include Capri Global Holdings, Coal India, NTPC, Vedanta, JSW Energy, Naveen Jindal-owned Jindal Steel & Power, iLab India Special Fund, Rashmi Metaliks and Sherisha Technologies, ET reported on August 3.

Adani Power made the highest bid of Rs 27,000 crore, followed by Capri Global at Rs 25,000 crore and NTPC at Rs 22,200 crore.

PWC-backed resolution professional Sumit Binani has admitted “Rs 29,330 crore in claims from financial creditors for the thermal power company, which operates three units of 600 MW each in Chhattisgarh.

No less than six ARCs jointly control 54.4% of the applications verified after obtaining loans from several banks.