Lenders seek bids for Coastal Energen with more than Rs 7,000 crore in debt

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Published: May 21, 2019 8:30:04 AM

The State Bank of India (SBI)-led consortium of lenders to Coastal Energen, which owes them Rs 8,176 crore, on Monday sought bids for the stressed power plant from companies, funds and private equity investors.

Lenders seek bids for Coastal Energen with more than Rs 7,000 crore in debtLenders seek bids for Coastal Energen with more than Rs 7,000 crore in debt

The State Bank of India (SBI)-led consortium of lenders to Coastal Energen, which owes them Rs 8,176 crore, on Monday sought bids for the stressed power plant from companies, funds and private equity investors.

In order to qualify as bidders, companies must have a consolidated net worth of at least Rs 500 crore and financial investors must have assets under management (AUM) of at least Rs 2,000 crore or committed funds of at least `1,000 crore for investment in India.

If a consortium bids for the power plant, the consolidated net worth of one of the consortium partners should be at least `500 crore, SBI Capital Markets (SBICaps) said in a bid document.

The sale will be carried out through the Swiss challenge method.

This is the third time lenders have issued a fresh call for buyers for the Tuticorin-based 2×600 megawatt (MW) coal-based power plant. As recently as April 2019, lenders were hoping to complete a one-time settlement (OTS) with Ahmed Buhari-held Coal and Oil group, which, in turn, is the promoter of Coastal Energen. The group had offered to pay `3,000 crore and banks were awaiting 10% of the amount upfront either as cash or in the form of bank guarantees.

The outstanding term debt of the company stood at `7,227 crore and working capital loans outstanding were worth `949 crore as on September 30, 2018.

Bankers have been working to resolve stressed power assets outside the Insolvency and Bankruptcy Code (IBC) since September last year. This was after the Supreme Court asked the Reserve Bank of India and others to desist from invoking insolvency proceedings against corporate defaulters as per the February 12 circular.

In the bid document, SBICaps said Coastal Energen has been facing challenges due to non-availability of power purchase agreements at remunerative tariffs and consequently has not been able to service its obligations under credit facilities provided by the lenders.

“Pursuant to the Strategic Debt Restructuring Scheme (SDR) dated June 8, 2015 issued by the Reserve Bank of India, with a resolution to change the management of the company, the lenders have converted part of the outstanding loan and facilities …into 10,75,61,160 (Ten Crore Seventy- Five Lakh Sixty-One Thousand One Hundred and Sixty) equity shares of the company, constituting 51% (fifty-one per cent) of the equity shareholding in the company,” the bid document said.

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