Adani to clinch sweetened $1 billion Udupi power deal

MUMBAI: Billionaire Gautam Adani has clinched a reworked deal to acquire Lanco Infratech's 1200 MW coal fired Udupi power plant shutting out rival suitors who looked to break in after the original transaction did not meet closure deadline, people familiar with the matter said. 

Adani Power Ltd's Rs 6000 crore deal to acquire the thermal plant that runs on imported coal was first signed in August last year but failed to meet a December deadline as it did not receive approvals from some Lanco lenders, who failed release pledged shares. 

Last weekend, Adani struck a new deal agreeing to value the asset 5-7% higher to accommodate additional interest accruals made by the banks, and agreed to advance further Rs 200 crore to Lanco which agreed to extend to deal deadline to March end. 

"There's a correction in the pricing, which will value the deal almost Rs 400 crore higher," sources cited earlier said. As part of the original transaction, Adani had already advanced Rs 125 crore to Lanco Infratech. Adani is also said to have won the support of the 18 member lenders' consortium to take the deal forward. 

A formal announcement is due anytime now. Official queries to both Adani Power and Lanco remained unanswered at the time of going to press. 

The breakthrough came even as Delhi high court asked both the parties to arbitrate their dispute regarding the sale transaction. The court directive followed Adani's petition which sought a restraining order on Lanco from terminating the share purchase agreement or the selling the asset to other suitors. 

Media reports had speculated about Sajjan Jindal controlled JSW Power and Tata Power-ICICI Venture combine could make fresh proposals as the Adani deal remained in limbo. For Lanco, looking at de-leveraging its debt laden balance sheet, the sale of Udupi power plant was crucial. The Hyderabad based infra group has been in rejig mode to service Rs 35,000 crore debt (as of FY14). 

Udupi is country's first independent power project operating fully on imported coal and with a captive jetty of 4 million tonnes. The plant sells 90% of the power to Karnataka and the residual 10% to Punjab. The plant has an agreement with Karnataka to expand capacity to 2500 MW. 

Adani last year announced that it had become the country's largest private producer with about 9000 MW of installed capacity, and it plans to have it ramped up to 20,000 MW by the end of this decade. Adani Power shares on BSE closed down 1.6% at Rs 46.35 while Lanco Infratech shares were down 4% at Rs 6 in a falling Mumbai market. 

BOX: Adani Group flagship Adani Enterprises on Monday announced signing of MoU with Rajasthan government to set up India's largest solar park of 10,000 MW. "India has embarked upon an ambitious program of becoming a world leader in renewable power generation, with a special focus on solar. The development of Solar Park facility is our contribution towards realization of our Prime Minister's campaign and commitment towards clean and green energy in India." said Mr Gautam Adani, Chai.

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Power and Energy