Mutiara & Precious Energy Holdings, the existing promoters of Coastal Energen Pvt Ltd, which is under the Corporate Insolvency Resolution Process, have offered a total settlement of ₹5,847 crore, including 15 per cent equity, amid news of Adani Power emerging as the successful bidder to buy the troubled power company.

Of the total settlement offered, ₹2,327 crore has already been settled with the State Bank of India (SBI) Consortium, according to a statement from Coastal Energen.

The ₹5,847 crore settlement offer works out to an 82 per cent (₹4.87 crore per MW) recovery for banks vs. ₹3,440 crore (₹2.87 crore per MW) offered by Dickey-Adani Power, it said.

It also pointed out that the settlement offered by existing promoters is among the highest in the country. Meenakshi Energy concluded at ₹1.44 crore per MW, Jindal India at ₹2.03 crore per MW, and Essar at ₹1.33 crore per MW.

Loan for power project

The SBI-led consortium had provided loans to Coastal Energen to establish a 1,200 MW (2 and 600) thermal power project at Thoothukudi in Tamil Nadu.

Due to delays and a cost over-run, the project cost shot up to ₹7,870 crore (with debt of ₹6,296 crore and equity of ₹1,574 crore) from the original cost of ₹4,297 crore (with debt of ₹3,323 crore and equity of ₹859 crore).

The project’s Unit 1 of 600 MW is tied up with Tangedco under a 15-year Power Purchase Agreement. Unit 2 faced difficulties in getting long-term PPAs, and consequently, the company couldn’t service its obligations under the credit facilities provided by the lenders.

In February 2022, the National Company Law Tribunal, Chennai, admitted the application filed by SBI against Coastal Energen, promoted by Coal & Oil Group through Mutiara Energy Holdings Ltd., Mauritius, and Precious Energy Holdings Ltd., a Dubai-based energy conglomerate, to initiate the CIRP (Corporate Insolvency Resolution Process).

“With the above settlement offer, the Promoters of Coastal Energen are confident that the SBI-led Consortium will view the offer favourably considering an extremely attractive recovery of 82 per cent and amongst the highest in the country. Despite financial constraints, existing promoters ensured Coastal Energen was well maintained, enabling a good recovery for banks, said the company.

Coastal Energen was one of 34 stressed IPPs (independent power producers) identified by the Government of India that are nearing resolution.