Banks to take 55% haircut on Coastal Energen’s debt of Rs 6,500 crore

Banks have agreed for a one-time settlement for Tamil Nadu-based Coastal Energen, which owes creditors Rs 6,500 crore. Lenders have agreed to sell the company’s debt at a 55% haircut to a consortium comprising Hong Kong’s alternative investment fund SSG Capital and the distressed debt unit of Deutsche Bank, two people involved in the negotiations said.

A 55% haircut works out to an upfront cash payment of Rs 2,925 crore, which the lenders will receive in lieu of their debt.

They have also been offered a 15% equity in the firm, which could give them an upside in the future, said one of the persons quoted above. “The equity value is approximately Rs 200 crore, which we will get through issuance of fresh shares to banks. We expect this resolution plan to be completed either by the end of the current quarter or early next quarter,” said one of the two bankers quoted above.

Coastal Energen is the flagship power generating firm of Ahmed Buhari-held Coal and Oil Group. “We are waiting only for SBI to give a go ahead. All other lenders are on board” said the second person. If successful, this will be the fourth power sector settlement outside the NCLT.

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