Adani Power's ₹7K cr deal to buy DB Power assets falls through

NEW DELHI: Embattled tycoon Gautam Adani-led Adani Power's planned Rs 7,017-crore acquisition of coal-based electricity generating units of DB Power Ltd has fallen as the deadline to complete the transaction expired without signing of the pact.

''We wish to inform that the long stop date under the memorandum of understanding dated August 18, 2022, has expired,'' Adani Power said in an exchange filing on Wednesday, without providing any information about the extension of dates or agreement renegotiation.

The announcement of the expiry of the long-stop date essentially implies that the acquisition is off for now.

The date to complete the process of acquisition of DB Power was extended four times after the initial deal was signed in August last year.

This comes at a time when the ports-to-energy conglomerate is battling fallout of a damning report by a US short-seller that alleged accounting fraud and stock manipulation, allegations that the group has vehemently denied.

The report, which flagged high debt including pledging shares of inflated stock for loans, put the entire group on precarious financial footing.

Since the January 24 report, the group companies have seen half of their market value wiped out and the conglomerate having to pledge more shares to meet lending norms. It also called off a follow-on share sale at its flagship firm, Adani Enterprises Ltd that barely scraped through on the last day of the sale.

The acquisition of DB Power, which currently operates a 2x600 MW coal-fired power plant in Janjgir Champa district in Chhattisgarh, was expected to expand Adani Power's offerings and operations in the thermal power sector in the state.

In the stock exchange filing, the company did not give reasons why the deal could not be completed or if the deal would be revived in future.

The initial term of the memorandum of understanding (MoU) was till October 31, 2022, which was extended by mutual agreement. The long-stop date was first extended to November 30, 2022, and then to December 31, 2022, and January 15, 2023, and finally to February 15, 2023.

DB Power has long and medium-term power purchase agreements for 923.5 MW of its capacity, backed by fuel supply agreements with Coal India Ltd. It had recorded a turnover of Rs 3,488 crore for the financial year 2022.

The DPPL (Diliigent Power Pvt Ltd) is the holding company of DB Power.