Jindal Power has recently withdrawn its bid to acquire Lanco Amarkantak Power. The sudden decision comes just after the company had outbid Adani Power for the distressed thermal power structure currently undergoing corporate insolvency proceedings.
Jindal Power Limited (JPL) is one of the leading players in the Indian energy sector, owning a varied energy portfolio that includes both thermal and renewable sources. With a formidable installed capacity of 4300 MW, JPL has played a crucial role in addressing the nation’s increasing demand for power.
In 2007, JPL has established an Independent Power Plant (IPP) featuring a 4×250 MW thermal power unit in the Raigarh district of Chhattisgarh. JPL has further expanded its operations in Tamnar, where it now operates a 2400 MW (4×600 MW) thermal power plant.
In a development that has sent shockwaves through the energy sector, Jindal Power, one of the prominent players in the industry, has suddenly pulled out of the race to acquire Lanco Amarkantak Power. The company had recently succeeded over Adani Power with its bid for the beleaguered thermal power company, only to reverse its decision days later.
With Jindal Power’s exit, the field is now narrowed to three contenders – Adani Power, Reliance Industries, and a consortium led by Power Finance Corporation (PFC).
Jindal Power has officially submitted its withdrawal application to the Amravati National Company Law Tribunal (NCLT). The company had initially sought the tribunal’s approval in mid-January to participate in the sale process of Lanco Amarkantak Power.
However, lenders had imposed certain conditions, including a written commitment for an unconditional, upfront cash offer and adherence to Request For Resolution Plant (RFRP) terms.
Jindal Power failed to provide the required written commitment. The company informed the tribunal that it would only furnish the commitment after receiving approval from the adjudicating authority. This hesitation reported came from the discomfort of giving an unconditional and upfront offer, leading to the company’s decision to withdraw from the acquisition race.
On January 12, Jindal Power filed a petition with the NCLT seeking approval to participate in the proposed auction of Lanco Amarkantak. Eventually, on January 16, the company presented a ₹4,203 crore cash offer along with a ₹100-crore bank guarantee. This bid was marginally higher than Adani Power’s ₹4,100 crore offer made a month earlier.
Adani Power’s attempt to acquire Lanco Amarkantak had been marked by an increased offer of ₹4,100 crore, up from the initial ₹3,650 crore proposal in November. However, this uninvited offer came almost 11 months after 95% of lenders had voted in favour of a ₹3,020-crore resolution plan put forth by a PFC-led consortium.
By the time Adani made its offer, the Competition Commission of India (CCI) had already endorsed the PFC-led consortium’s acquisition, awaiting NCLT approval.
Despite the majority of lenders supporting the PFC-led consortium’s resolution plan, the NCLT permitted a fresh auction for the sale of Lanco Amarkantak Power, with Adani’s ₹4,100 crore bid serving as the base. Alongside the consortium, Reliance Industries, which had initially proposed a resolution plan, was invited to participate in the auction.
The sudden withdrawal of Jindal Power from the Lanco Amarkantak acquisition race has added a layer of uncertainty to the ongoing story. The three remaining contenders – Adani Power, Reliance Industries, and the PFC-led consortium – are now set for a tough competition as they fight for control over the distressed thermal power company.
The difficulties of this event highlight the complexities and challenges built into the corporate bankruptcy resolution process, leaving industry observers anticipating the outcome of the coming auction.