BackGMR Infrastructure announces debt restructuring of GMR Rajahmundry
Strategic debt restructuring, or SDR, invoked on absence of a long-term fuel supply agreement at the project, GMR Infrastructure says in a BSE filing
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Mumbai: GMR Infrastructure Ltd on Friday said a consortium of lenders to its unit GMR Rajahmundry Energy Ltd had decided to invoke strategic debt restructuring (SDR).
“As per the SDR scheme, out of the total outstanding debt (including overdue interest) of ₹ 3,780 core, debt to the extent of ₹ 1,414 crore has got converted into equity by which the consortium lenders would have 55% shareholding and balance 45% would be held by GMR," the filing said.
The lenders invoked SDR after considering the absence of a long-term fuel supply agreement and long-term power purchase agreements at the project, GMR Infrastructure said in a BSE filing on Friday. The company has in a meeting issued equity shares “proportionately to all the lenders", the filing said.
GMR Rajahmundry operates a 768 megawatt natural gas-based power plant in Andhra Pradesh, supply for which comes under the government’s e-RLNG bid scheme. RLNG is short for Regassified Liquified Natural Gas.
The project, completed in 2012, has been stranded due to non-availability of gas supply. The company had attributed the delays to a sharp fall in gas production at Reliance Industries Ltd’s KG-D6 basin.
The project, which had significant cost over-runs, was commissioned in October 2015.
Under the government’s e-RLNG bid scheme for stranded gas power plants, GMR Rajahmundry has gas supply for phase-II and phase-III of bidding, GMR Infrastructure said in the statement.
“In phase-III of the scheme, the plant will receive gas from GAIL to operate up to 30% PLF (plant load factor) and supply the entire power produced to Andhra Pradesh Discoms as per power purchase agreements executed with them," the statement said.
GMR Infrastructure, which has interests in airports, energy, transportation and urban infrastructure, is monetizing assets to repay creditors after years of debt-driven expansion.
Over the past year, GMR has been working to strengthen its balance sheet. As of 30 September, GMR Infrastructure had total consolidated debt of ₹ 43,439.60 crore.
According to norms issued by the Reserve Bank of India (RBI) in June 2015, banks can convert a part of a defaulting company’s debt into majority equity and assume operational control. They will then have 18 months to subsequently find a buyer for this stake.
Since the SDR rules were introduced, lenders have converted debt to equity in a number of firms, including Electrosteel Steels Ltd, Ankit Metal and Power Ltd, Rohit Ferro-Tech Ltd, IVRCL Ltd, Gammon India Ltd, Monnet Ispat and Energy Ltd, VISA Steel Ltd, Lanco Teesta Hydro Power Pvt. Ltd, Jyoti Structures Ltd and Alok Industries Ltd.
The GMR group owns 15 power generation projects, nine operating road assets and a double rail-track line of eastern dedicated freight corridor under development. It also operates the international airport in New Delhi.
On 9 May, GMR Infrastructure said Malaysia’s largest electric utility Tenaga Nasional Bhd will invest $300 million in another subsidiary GMR Energy Ltd and pick up 30% equity stake in a “select portfolio" of its energy assets.
In March, GMR Infrastructure agreed to sell 51% equity stake in its 99-km highway project in Karnataka to its joint venture partners, which earned it ₹ 85 crore and removed ₹ 1,077.94 crore in debt associated with the project off its books.
Earlier, in December, GMR raised $300 million by issuing 60-year foreign currency convertible bonds to Kuwait Investment Authority. The SDR announcement was made after market hours.
GMR Infrastructure’s shares fell 3% to ₹ 11.63 apiece on BSE on Friday, while the Sensex fell 1.17% to 25,489.57 points.
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