Vedanta Ltd., the Indian mining and energy giant, has emerged as the successful bidder for debt-laden Meenakshi Energy Ltd. with its Rs. 1,440 crore bid.
Vedanta’s stock filing dated 18th January 2023 states that subsequently, the company’s Board of Directors has approved Vedanta’s acquisition of Meenakshi Energy. For the acquisition to go through, approval of National Company Law Tribunal (NCLT) is yet to be secured. Vedanta expects the takeover to be complete in FY-24.
Vedanta to Operate Meenakshi Energy’s 1000 MW Coal-Based Power Plant as an IPP
Meenakshi Energy Ltd. is a partly-running 1000 MW coal-fired power plant in Nellore, Andhra Pradesh. Vedanta seeks to operate this thermal power plant as an Independent Power Producer (IPP) in order to sell power in the market. The company will be entering into short-term and medium-term Power Purchase Agreements (PPAs) with different clients for this purpose.
As of now, Phase 1 of Meenakshi Energy’s power plant, which comprises 2 units of 150 MW power generation capacity each, is completed. The remaining 700 MW capacity comprising 2 units of 350 MW capacity each needs to be tested, and subsequently its Commercial Operation Date (COD) will be declared.
While Phase 1 of Meenakshi Energy’s coal-fired plant uses imported coal, Phase 2 will can use both imported as well as domestic coal.
Vedanta to Pay 312 Cr. Upfront, Balance to be Paid through Debentures over 5 Years
Vedanta will be acquiring 100% shares of Meenakshi Energy.
The company clarified that out of the total amount of Rs. 1,440 crore to be paid, Rs. 312 crore will be paid upfront in cash. “Balance INR 1,128 Cr in the form of secured unlisted non-convertible debentures issued by Meenakshi Energy Limited to the Financial Creditors to be repaid in 5 equal instalments over a period of 5 years starting from the end of 2nd year”, stated Vedanta’s stock filing.
Meenakshi Energy Stuck in Financial Doldrums since 2019
Meenakshi Energy, which was established in 1996, was admitted to resolution process under the Insolvency and Bankruptcy Code (IBC) in 2019.
The company owed money to several lenders, and though Rs. 12,944 crore worth of claims which were submitted by 31st March 2022, claims worth Rs. 4,625 crore were admitted.
The company reported a revenue of Rs. 201 crore for the financial year 2021-22.
About Vedanta Ltd.: Vedanta Ltd. is a Mumbai-headquartered Indian mining and minerals company. Vedanta’s net income from operations during FY-22 stood at Rs. 62,801 crore. The company employs about 1,50,000 employees directly or indirectly.