Adani Power shares surge 2% on NCLT nod for ₹4,101 cr Lanco acquisition

Shares of Adani Power (APL) surged 2% in the morning trade on the NSE today after the company received approval from the Hyderabad Bench of the National Company Law Tribunal (NCLT) for its ₹4,101 crore resolution plan for acquisition of power generation firm Lanco Amarkantak (LAPL).

APL shares opened at ₹687 today and hit a high of ₹689, up 2.2% from yesterday’s close of ₹673.70.

The tribunal approval Lanco's acquistion on August 21, 2024, which was disclosed by Adani Power in a post-market release on August 22.

Adani Power will acquire 100% shareholding in LAPL through an upfront cash payment, as part of LAPL’s Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code. The acquisition, subject to conditions outlined in the resolution plan, is expected to be completed by October 20, 2024, within 60 days of NCLT approval.

The said amount will be disbursed to secured financial creditors, with ₹4,000.13 crore allocated to those who voted in favour and ₹100.87 crore to those who did not, including Canara Bank, SIDBI, and UCO Bank.

The Adani Group subsidiary initially offered a resolution amount of ₹3,645 crores in October 2023, which was later increased to ₹4,101 crores in December, backed by a ₹100 crore bank guarantee. APL was eventually the sole participant and was declared the highest bidder. The Committee of Creditors (COC) approved APL's revised resolution plan with a 95.40% voting share on March 4, 2024.

LAPL owns and operates a 600 MW thermal power plant in Korba district of Chhattisgarh. A majority of power from Phase-I is supplied to Haryana and Madhya Pradesh DISCOMs under long-term Power Purchase Arrangements through Power Trading Corporation, APL informed via exchange filing. LAPL has a 2.784 MMT long-term fuel supply agreement with Coal India's subsidiary, South Eastern Coalfields (SECL). The company is also expanding its capacity with a 2×660 MW (1320 MW) plant under Phase II. The company generated a turnover of ₹1308.33 crore in FY 23-24.

The nation’s largest private power producer APL has an operating thermal capacity of 15.25 GW and has 1.60 GW under construction across multiple states. The company posted a revenue of ₹14,955.63 crore in the first quarter of this fiscal from the power generation segment, up 36% from the year-ago quarter’s revenue of ₹10,983.13 crore. However, consolidated net profits dropped 55% to ₹3,912.79 crore from ₹8,759.42 crore year-on-year.  This acquisition will boost its total operating capacity to 15.85 GW.

In addition to the acquisition, Adani Power notified exchanges yesterday evening of a ₹1.50 lakh fine imposed by BSE for non-compliance with SEBI regulations regarding Board appointments. The company stated that with the appointment of a new Independent Director on May 1, 2024, it is now in compliance with the regulations.