1. Lenders convert debt into equity in Adhunik Power

Lenders convert debt into equity in Adhunik Power

Lenders to Kolkata-based Adhunik Power and Natural Resources Ltd (APNRL) have decided to convert a large portion of their loans to equity using the Reserve Bank of India’s...

By: | Mumbai | Published: December 28, 2015 12:33 AM
Power

Adhunik Power and Natural Resources reported a net loss of Rs 151.08 crore in FY14 and its gross debt stood at Rs 3,116 crore.

Lenders to Kolkata-based Adhunik Power and Natural Resources Ltd (APNRL) have decided to convert a large portion of their loans to equity using the Reserve Bank of India’s (RBI) strategic debt restructuring (SDR) scheme, bankers aware of the development told FE.

Adhunik Power reported a net loss of Rs 151.08 crore in FY14 (latest data available) and its gross debt stood at Rs 3,116 crore, of which Rs 2,474 crore were project loans and working capital limits comprised Rs 694 crore.

FE had earlier reported that a State Bank of India-led consortium of around 12 banks, in November last year, initiated a corrective action plan — under the joint lenders’ forum — since the firm had delayed repayments by more than 60 days. Lenders had extended the firm additional short-term loans of R295 crore. Bankers have also been nudging the debt-laden company to sell its 540-megawatt (MW) thermal power plant in Jharkhand.

“We are confident of finding a buyer as the asset is of a good quality,” a banker said. Lenders have 18 months to sell the asset, after which it will turn into a bad loan.

Adhunik Power has entered into a memorandum of understanding (MoU) with the Jharkhand government to set up a 1,080-MW coal-based thermal power plant.

The firm has implemented a 540-MW (2×270-MW) power plant at villages Padampur and Srirampur in Seraikela-Kharsawan district in Jharkhand.

An SDR allows banks to convert debt at a price below the current market value and can now own 51% or more of the equity of the company. In case of unlisted companies, a break-up value should be used, which is the book value per share calculated from the company’s balance sheet, adjusted for cash flows and financials, post the earlier restructuring. According to RBI, in case the latest balance sheet is not available,  the break-up value shall be Re 1.

So far, bankers have decided to implement the SDR scheme for Electrosteel Steels, Jyoti Structures, Lanco Teesta Hydro Power,Monnet Ispat, IVRCL, Coastal Projects, Gammon India and Ankit Metal and Power.

Two senior public sector bank (PSB) official confirmed that lenders have agreed to convert loans to equity using the SDR scheme. “The company has agreed to the proposal,” a banker said.

In February 2015, Brickwork Ratings had downgraded the company’s long-term and short-term credit facilities. Plant efficiency has been on the lower side with the plant load factor for Phase I expected to be around 65% for FY15 and that of Phase I I expected to be lower, the ratings agency noted in a report. The report added that the company’s negative cash flows company have been managed by increasing their term loans offtake.

The company is headed by Naresh Goyal and is part of Adhunik Group, which has interests in steel manufacturing and power production.

Invoking SDR
* An SDR allows banks to convert debt at a price below current market value and own 51% or more of the
company
* Adhunik Power and Natural Resources reported a net loss of Rs 151.08 crore in FY14 and its gross debt stood at Rs 3,116 crore
* A State Bank of India-led consortium, in November 2014, initiated a corrective action plan under the joint lenders’ forum

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