Lenders to seven troubled power projects are close to resolving loans totalling over ?74,000 crore outside the bankruptcy framework, including by selling three of the companies to Adani Group. According to two people aware of the discussions, Coastal Energen Pvt. Ltd (debt of ?6,132 crore), KSK Mahanadi Power Ltd (?17,194 crore) and GMR Chhattisgarh Energy Ltd (?8,174 crore) will be sold to Adani Group.
The lenders, led by State Bank of India (SBI), plan to frame resolution plans under the Scheme of Asset Management and Debt Change Structure, or Samadhan. Under the Samadhan scheme, a stressed power company’s debt will be divided into sustainable and unsustainable portions. While the liability of the sustainable debt will be assumed by the new owner, the unsustainable part will be converted into equity.
Among the rest, RattanIndia Power Ltd’s lenders would settle for a haircut of around 50% of the distressed power company’s outstanding loans of ?7,108 crore; and SKS Power Generation (?4,801 crore) had already been acquired by Hong Kong-listed Agritrade Resources, they said.
Resurgent Power would buy Prayagraj Power Generation Co. Ltd (?11,086 crore), while Jaiprakash Power Ventures Ltd (JPVL) would see its debt of ?19,958 crore being recast without a change in its existing promoter, they said.
While all lenders have approved the sale of SKS Power and Prayagraj Power, final approvals for the other five are expected by 31 January, the first of the two people cited earlier said.
“The recovery from these assets will be visible in the fourth quarter results,” the person said, adding that in the case of KSK Mahanadi, loans of the company’s special purpose vehicles (SPV) Raigarh Champa Rail Infrastructure SPV and KSK Water Infrastructure SPV would be pooled together for sale to Adani.
The second person said the seven companies have stable power purchase and fuel supply agreements and also meet the lenders’ target of getting ?3 crore per megawatt and at least 40% of the debt as sustainable.
“The rest (of the stressed power assets) will have to be resolved either through the bankruptcy resolution process or other methods as Samadhan would not work,” the second person said.
Emails sent to SBI, SKS Power, GMR, Prayagraj Power, JPVL, RattanIndia Power, Coastal Energen, KSK Mahanadi and Adani Group remained unanswered.
A parliamentary committee on stressed and non-performing assets in the electricity sector said that 34 coal-fuelled power projects, with an estimated debt of ?1.77 trillion, had been identified. Issues faced by these projects include paucity of funds, lack of power-purchase agreements and absence of fuel security.
The parliamentary committee report named Adani Power Maharashtra Ltd (debt of ?11,765 crore) and Adani Korba West (?3,099 crore) among the 34 stressed power projects.
In September, the Supreme Court had barred banks from referring power firms to the National Company Law Tribunal under the Reserve Bank of India’s (RBI) 12 February circular.
Through that circular, RBI had asked banks to draft resolution plans for defaulters within 180 days in cases where the exposure is above ?2,000 crore. Following that, several petitioners, including GMR Energy Ltd, RattanIndia Power, Association of Power Producers, Independent Power Producers Association of India, Sugar Manufacturing Association from Tamil Nadu and a shipbuilding association from Gujarat, had intervened in the matter in different courts. The apex court had also directed that all pleas related to the circular be transferred to it.