New Delhi: The Board of Directors of NHPC Ltd has approved the merger of Lanco Teesta Hydro Power Ltd with the company, NHPC said in a regulatory filing to the stock exchanges on Wednesday. "… it is to inform that the Board of Directors of NHPC Limited (Company or Transferee Company) in its meeting held on Tuesday, December 7, 2021 has inter-a/ia accorded its approval for the merger/amalgamation of Lanco Teesta Hydro Power Limited (Transferor Company), which is a wholly owned subsidiary of the Company, with the Company under Section 230-232 of the Companies Act, 2013 and other statutory provisions as per the terms and conditions mentioned in the Scheme of Amalgamation (Scheme)," NHPC told the stock exchanges.
"The scheme will be filed with the relevant regulatory authorities, including the Ministry of Corporate Affairs or any other appropriate authority, for their approval and sanction," it added.
Explaining the rationale behind the decision, NHPC said that the merger of Lanco Teesta Hydro Power with NHPC will enable access to debt funding at NHPC's credit rating, whereas LTHPL, on its own, will incur debt financing at a higher rate. A higher interest cost, would adversely impact the tariff of the Teesta-VI HE project being developed by LTHPL, it added.
Lanco Teesta Hydro Power Ltd requires a number of support functions such as contracts and procurement, IT&C, cost engineering, design and engineering, corporate finance, planning, and commercial and so on for its operations. Presently, Lanco Teesta Hydro Power has only nominal staff strength due to which support functions have been entrusted to NHPC as a consultancy assignment on payment basis, said NHPC.
The hydropower PSU added that the merger will allow efficient utilisation of capital and create a consolidated base for the future growth of NHPC and will help enhance its standalone financial parameters.
NHPC had acquired Lanco Teesta Hydro Power Ltd under the Corporate Insolvency Resolution Process (CIRP) in 2019. The entity was implementing the 500 MW (125 MWx 4) Teesta VI Hydro Power Project on Teesta River in Sikkim. The Hyderabad bench of the National Company Law Tribunal (NCLT) had approved NHPC's resolution plan for debt-ridden Lanco Teesta Hydro Power Ltd (LTHPL) on July 26. NHPC had offered a resolution plan worth Rs 897.50 crore for the acquisition.
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