GMR Infrastructure Ltd (GIL) has announced the debt resolution for its natural gas-based power plant subsidiary GMR Rajahmundry Energy Ltd. (GREL) with the IDBI Bank-led consortium of lenders.
In a press release, GMR said the existing debt of ₹2,353 crore has been split into two parts: the sustainable debt of ₹1,412 crore, against which the parent company has infused equity of ₹395 crore towards meeting 20% of principal and interest-servicing obligations of GREL for the first year. This leaves an outstanding balance of ₹1,130 crore of sustainable debt, which carries a floating rate of 9% per annum repayable over 20 years.
Of the existing debt of ₹2,353 crore, the remaining ₹941 crore, which is the unsustainable debt, has been converted into Long Dated Cumulative Redeemable Preference Shares carrying 0.1%, which is repayable from the 17th to the 20th year
GMR said that all lenders have approved of the resolution plan.
GMR Rajahmundry Energy operates a 768 MW natural gas-based power plant at Rajahmundry in Andhra Pradesh. The project was commissioned in 2015 but has struggled with gas supply since inception, due to the fall in gas production from the KG—D6 basin. The company went into strategic debt restructuring in 2016, in which lenders converted part of their exposure into 55% equity holding.
The consortium put the equity holding up for sale in early 2018 but the project failed to find buyers, mostly on account of the continued unviability of gas-based power plants in India.
In the statement, Grandhi Kiran Kumar, Managing Director & CEO, GIL said, “ The first of its kind resolution plan offers a mutually beneficial resolution for both Lenders and the company through a long-term solution for the existing debt and related obligations of the group. It has reduced the debt for GMR Group and we believe this will de-risk the Group substantially. This also offers quality assets built on the ground an opportunity to perform to its potential. "
GMR said that it remains confident of availability of gas in the future, ensuring performance of its Rajahmundry plant and thereby meeting obligation towards both its sustainable as well as long dated preference shares.
After the implementation of the resolution plan, holding structure continues to remain the same with lenders being majority owners of the gas plant with 55% shareholding while the GMR Group holds the remaining 45%.
While this is the first resolution of a gas-based plant, GMR also holds a second stressed asset, a 1370 MW coal-based power plant in Chhattisgarh which has outstanding loans of ₹5800 crore. Lenders to the project have placed this company on the block as well.