Simhapuri Energy: High Court cautions banks
The company’s functioning was severely affected when the plant was kept idle in order to reserve the power capacity for AP discoms
Hyderabad: In an interim order, the Telangana High Court on Friday directed State Bank of India (SBI) and other banks not to dispose of Simhapuri Energy Limited for any less value than the OTS proposal of Rs 800 crore.
Justice G. Radha Rani was dealing with a petition filed by Madhucon Infra, the majority shareholder in Simhapuri Energy Limited with a 80.78 per cent shareholding.
It urged the court to restrain the banks from undervaluing the firm and its assets to anything less than the OTS proposal. It brought to the notice of the court that a lender bankers’ consortium was trying to dispose of the company for a paltry
Rs 335 crore.
The company has set up a thermal power plant with a capacity of 600MW using imported coal for power generation. It obtained loans to the tune of Rs 3,250.34 crore from a SBI-led consortium of banks. The company has repaid term loans to an extent of Rs 2,054 crore. The company’s functioning was severely affected when the plant was kept idle in order to reserve the power capacity for AP discoms.
As an alternative measure, they submitted two OTS proposals; one for an amount of Rs 800 crore to secured lenders and second of Rs 700 crore (plus Rs 1,811 crore) to be allotted as equity share capital. However, SBI as the lead bank did not consider the said proposal following which the company was set for liquidation.
During the liquidation process, the value of the company was reduced from Rs 600 crore to Rs 335 crore. It was then that Madhucon Infra Limited approached the High Court, they said.