GMR Rajahmundry Energy lenders accept resolution plan to solve gas plant misery

GMR Infrastructure Ltd. (GIL) Friday said it's an associate company, GMR Rajahmundry Energy Ltd a debt-laden 768 MW natural gas-based power plant in Andhra Pradesh, has worked out a Resolution Plan which was accepted by all its lenders. According to a press release, the existing debt of Rs 2,353 crore of the power producer was brought down to Rs 1,412 crore and the remaining balance outstanding sustainable debt of Rs 1,130 crore will carry a floating rate of 9 per cent per annum repayable over 20 years.

Against Rs 1,412 crore debt, the GMR Group has already infused an amount of Rs 395 crore towards meeting 20 per cent of principal towards repayment of the sustainable debt and the interest servicing obligations of GREL for the first year, it said. The balance debt of Rs 941 crore has been converted into Long Dated Cumulative Redeemable Preference Shares (CRPS) carrying 0.1 per cent which is repayable from 17th to the 20th year, GMR said.

Grandhi Kiran Kumar, Managing Director and 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," he added.

GMR remains confident of availability of gas in years to come ensuring good performance of its Rajahmundry plant and thereby meeting obligation towards both its sustainable as well as long-dated preference shares. GMR believes that gas-based power plants will provide peaking power support to the country's growing non-conventional energy of wind and solar power, and the resolution plan shall be mutually rewarding to GMR Group and lenders as they continue to own 45 per cent and 55 per cent of shareholding respectively, he added.

The lenders to GMR Rajahmundry Energy, which was saddled with Rs 2,366 crore debt in May 2016 exercised the strategic debt restructuring (SDR) as per RBI guidelines. The power plant project was completed in 2012, but the commissioning of the project was delayed due to unavailability of gas supply on account of unprecedented fall in gas production in KGD6 basin which led to cost overruns. The project was fully commissioned on October 22, 2015.

(With inputs from agencies.)

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