NCLT nod for Vedanta-Meenakshi deal

Hyderabad: Vedanta Limited, a Mumbai-based multinational mining company said the National Company Law Tribunal's (NCLT) Hyderabad bench has cleared the decks for the company to acquire the debt-laden power company Meenakshi Energy Ltd, while turning down the objections raised by the competing bidder Consortium of Prudent ARC Ltd and Vizag Minerals and Logistics.

The Consortium of Prudent ARC moved the Tribunal seeking to restrain the Committee of Creditors (CoC) and the Resolution Professional from proceeding with the Challenge Process wherein Vedanta emerged as the preferred resolution applicant, the company said.

Vedanta submitted a bid to buyout Meenakshi Energy for Rs 1,440 crore, of which Rs 312 crore was to be paid upfront and the balance Rs 1,128 crore to be pumped in the form of secured, unlisted non-convertible debentures to be matured over five years.

Meenakshi Energy, which owns a 1,000-megawatt thermal power, went under the corporate insolvency resolution process (CIRP) in early 2019 and went on obtaining extensions for the CIRP period owing to Covid lockdowns and other reasons. The prospective resolution applicants with the consent of the CoC submitted revised offers to meet the needs of the lenders.

The Consortium of Prudent ARC took it to the notice of the Tribunal that Vedanta had twice revised its resolution plan by way of an addendum, which was contrary to the Code's provisions. Further, the Consortium also argued that the resolution professional can either allow revision/ modification of the resolution plans not more than once or can employ a challenge mechanism. The Consortium also contested the decision of the CoC to extend the timelines and go against the time-boundedness of the Code.

The resolution professional submitted to the Tribunal that it was the decision of the CoC with a majority of 99.18 per cent to undertake the challenge process for value maximisation. While Vedanta and Jindal submitted their addendum and amended financial proposals, the Consortium of Prudent ARC insisted on withdrawing the challenge.

During the challenge process, Vedanta revised its bid amount to Rs 1,440 crore, while Jindal revised its bid to Rs 1,344 crore. Since the Consortium of Prudent ARC did not submit its revised bid to participate in the challenge process, its previous bid was considered.

The resolution professional argued that the objective of the Insolvency and Bankruptcy Code, 2016 was the value maximisation of the corporate debtor, which was also time and again upheld by the Supreme Court that also upheld the commercial wisdom of the financial creditors.

Senior Counsel S Niranjan Reddy appeared for the Consortium of Prudent ARC, while senior counsel S Ravi represented the resolution professional and senior counsel Vivek Reddy appeared for the CoC.