lanco amarkantak power: Lenders pick PFC-REC offer for Lanco Amarkantak Power


A majority of lenders to Lanco Amarkantak Power voted in favour of an offer from the Power Finance Corp-REC team, whose debt-resolution plan drew the maximum support in a bidding race involving both the Adani Group and , people aware of the development told ET.

The PFC-REC team received 95% of lender votes by value of debt, while

secured 17%, people cited above told ET. The voting percentages need not total up to 100 as lenders could vote for one offer, an alternative, or all of the options on the table. Industries, the third bidder in the fray, did not receive any votes, said the people cited above.

PFC-REC is also an existing financier to the distressed electricity-generation company undergoing insolvency. Voting for the three plans ended on Monday.

The resolution professional, Saurabh Kumar Tikmani, backed by KPMG, held the voting for the three resolution plans amid allegations by minority secured creditors over unfair distribution of proceeds. The National Company Law Tribunal (NCLT) will hear minority lenders’ appeal on January 18.

“Even as lenders have voted on the plans, the resolution of the company would conclude only after the tribunal decides on distribution of proceeds,” said an advisor involved in the resolution. The PFC-REC team offered an upfront payment of Rs 3,020 crore at an auction held by lenders to identify the highest bidder. This would equate to a recovery of 21% of the admitted claims for the lenders. The other two bidders — Adani Power and Reliance Industries — boycotted the auction expressing dissatisfaction over the last-minute changes in the bidding process that seemingly favoured the PFC-REC team, ET reported on December 2.

The PFC-REC team also has a 42% debt exposure to Lanco Amarkantak Power and thus had a veto over the decisions taken by the committee of creditors. As per corporate insolvency rules, no decision can be taken until 66% of lenders approve it. Since Adani and Reliance did not participate in the auction process, the plans offered by them in the first round of bidding were placed for voting. Adani had offered upfront cash of Rs 2,950 crore, and Reliance Rs 2,103 crore.

In the first round, the PFC-REC team offered Rs 5,521.6 crore, of which Rs 1,010 crore was in cash lying in the company, and the remaining Rs 4,511 crore included staggered payments over 22 years.

Minority secured creditors voted for Adani’s plan as well the PFC-REC offer, while an entity voted against the PFC-REC plan, the people cited above said.

Secured minority lenders such as Edelweiss Asset Reconstruction Company,

and had filed a petition on what they described as unfair distribution of proceeds. Secured minority creditors said they have an exclusive charge on the assets of phase one of Lanco Amarkantak, which is the only phase (among three phases) generating cash. The first phase has two units of 300 MW each, and generated Rs 1,400 crore in cash.

The majority of lenders want sale proceeds to be distributed based on their claims. In such a scenario, PFCREC (also the highest bidder) will receive 42% of the proceeds even as the assets charged to them (Phases Two and Three) are not generating any cash. The legal counsel of Phase One lenders pointed out that the distribution of proceeds after re-computing the liquidation value is robbing the potential dissenting creditor of even its assured minimum safeguards.



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