Gautam Adani-controlled Adani Power (APL) is in advanced talks to raise $1.1-1.2 billion in overseas debt to help bring down interest costs, sources in the know of the development said.
Domestic firms have been increasingly looking to raise money abroad to capitalise on lower interest rates. The refinancing will help reduce the interest rate paid by APL to around 4% from about 9-10% earlier, sources said.
Deutsche Bank, State Bank of India and Standard Chartered are among the banks involved in the debt offering.
Adani Group?s billionaire chairman Gautam Adani had in December outlined plans to raise money through foreign debt. He had said the group is considering issuing $1.5 billion in global bonds to fund the development of its coal project in Australia that will supply fuel to its power projects in India.
The group?s power arm has been raising money through foreign debt to fund its capex and expansion projects.
APL raised $350 million in external commercial borrowings (ECBs) last year, according to RBI data.
APL, which expects to expand its capacity to nearly 10 GW from the current 5 GW by 2013, is in the process of setting up two major coal-based power projects ? a 3,300 MW power plant at Tiroda in Maharashtra and a 1,320 MW power plant at Kawai, Rajasthan.
The company, which is currently seeking permission from Indian authorities to pass on more of the increasing cost of imported fuel to customers, recently reported its fifth straight quarterly loss as it continued to grapple with rising fuel costs. APL?s net loss on a standalone basis for the quarter ended December, widened to R507 crore from a loss of R358 crore in the same period last year.
Adani has said the group can bring down its debt to equity ratio to below one by 2015 from the current level of nearly 3:1, if tariffs are increased.
APL, which currently generates 5,320 MW, aims to generate 20,000 MW by 2020 and is currently developing six power projects for generating 16,500 MW across Gujarat, Maharashtra, Rajasthan and Madhya Pradesh.
The company runs India?s largest power plant with a capacity of 4,620 MW in Mundra, Gujarat.
The company?s shares, which have shed nearly half of their value since trading at around R95 last February, were down 4% at R54.35 in late afternoon trading on Tuesday on the BSE.