Rolls Royce Meets Lenders To Discuss SPGL Stake Sale

Mumbai, March 24 | Updated: Mar 25 2004, 05:30am hrs
Rolls Royce (RR) has stepped up its efforts to sell its 32 per cent equity worth Rs 56.05 crore in the troubled Spectrum Power Generation Ltd (SPGL). RR team comprising RR Power Ventures president Jay Cheatham, legal counsel David Dale and commercial contract manager Ron Howard held a crucial meeting here on Wednesday with the Industrial Development Bank of India (IDBI)-led lenders to the 208 mw Spectrum power project to discuss sale plans.

The team also met the GVK group, which runs the Juggurpadu project in Andhra Pradesh, and also held meetings on Tuesday at Hyderabad with SPGLs former vice-chairman and managing director M Kishan Rao and former whole-time director M Raghuveer. Mr Kishan Rao is a director on the newly constituted SPGL board since September 2003. He had floated Towanda Services Ltd in the British Virgin Islands to receive business development charges or agency charges from RR for arranging EPC and operation and maintenance contracts between RR and SPGL.

Institutional sources confirmed Wednesdays meeting with the RR team. The sources told FE that RR reiterated its desire to get out of the Spectrum project on the grounds of pending legal cases and other issues.

Institutional sources declined to divulge further details at this point of time.

When contacted, RR sources declined to comment. A source said, It will not be appropriate at this juncture to offer any comment.

RRs move deserves importance especially when Aptransco, which has a an 18-year power purchase agreement with SPGL, has recently dashed off a showcause notice to the power utility seeking reduction in the Spectrum project cost by Rs 97.71 crore. Aptransco has objected to the agency commission of Rs 67.91 crore from RR paid to Towanda Services Ltd.

Similarly, Aptransco expressed its reservation over SPGLs entering into five bogus contracts for various civil works amounting to Rs 29.3 crore.

RRs move coincides with IDBIs initiative to restructure liabilities restricted to debt revamp of SPGL to be undertaken under the aegis of corporate debt restructuring (CDR) scheme.

IDBI has proposed that SPGL is required to execute a debtor creditor agreement (DCA) with all the participating lenders including working capital banks.

RR has stepped up its efforts when Spectrum Technologies USA (STUSA), which holds 17 per cent equity worth Rs 29.19 crore in SPGL, has submitted a one-time settlement of Rs 632 crore to IDBI.

RRs move is also crucial when Reliance Energy Ltd (REL) and Tata Power Company (TPC) have been exploring options to take over the Spectrum project.