The promoters of troubled power company Coastal Energen have reiterated their earlier settlement proposal of ₹5,847 crore, significantly higher than Adani’s offer of ₹3,440 crore.

In a statement, the company noted that the promoters’ total financial commitment to the project amounts to ₹7,097 crore, including the ₹5,847 crore offered as a settlement to banks (with ₹2,200 crore already settled) and ₹1,259 crore in equity progressively invested since 2006.

The company, which has been in bankruptcy process since February 2022, highlighted that this has been an 18-year journey of investment, with the promoters committed to a fair one-time settlement (OTS) with the consortium of banks. They aim for a fair and equitable process to manage and rebuild the power plant in Thoothukudi, Tamil Nadu.

In February 2022, the State Bank of India (SBI) and a 13-member banking consortium initiated NCLT proceedings against Coastal Energen due to defaults on a loan totalling ₹6,296 crore. This amount had escalated from ₹3,323 crore due to a 48-month bank funding delay amounting to ₹2,600 crore, retrospective taxes of ₹470 crore and a scope increase of ₹400 crore due to the project’s capacity increase from 1,080 MW to 1,200 MW. Additionally, ₹1,600 crore of working capital assessed by banks was not made available to the company.

Potential discrepancies

Recent discussions have highlighted potential discrepancies in the Expression of Interest (EOI) process and the unusual urgency shown by the Resolution Professional in issuing a Letter of Intent (LOI) to the Dicky Alternative Investments Trust (DAIT) – Adani Power Consortium.

While continuing to engage with the promoters of Coastal Energen, the Committee of Creditors (CoC) invited an EOI through the Corporate Insolvency Resolution Process (CIRP) on February 10, 2023. Interested parties included Jindal Steel Power, Sherisha Technologies and Dicky Alternative Investment Trust (DIAT). Adani Power’s bid was initially not shortlisted and was later rejected in a subsequent submission on July 29, 2023.

However, in October 2023, Adani returned as a joint venture partner of DAIT to make a backdoor entry as a consortium partner, despite DAIT not meeting the financial and experience criteria laid down by the CoC. This raises serious questions about the compliance of the DAIT-Adani Consortium’s bids with Insolvency and Bankruptcy Code (IBC) guidelines, the company explained.

In October 2023, Mutiara & Precious Energy Holdings, the existing promoters of Coastal Energen, offered a total settlement of ₹5,847 crore, including 15 per cent equity, while Adani Power emerged as the top bidder to buy the company.

However, lenders approved Adani’s ₹3,500-crore resolution plan, which was pending approval by the NCLT. In response, the promoters of Coastal Energen moved the NCLT against the resolution plan submitted by the Consortium of Dickey Alternate Investment Trust (DAIT) and Adani Power.

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