The GMR Rajahmundry Energy Limited (GREL), a subsidiary of GMR Infrastructure Limited (GIL), on Friday said that the consortium of lenders to GREL has converted Rs 1,414-crore debt to equity through the Reserve Bank of India’s (RBI) strategic debt restructuring (SDR) scheme. Banks now hold 55% stake in the company, it added.
“Considering the absence of long term fuel supply agreement (FSA) and long term power purchase agreements (PPA), the consortium of lenders of GREL have adopted SDR, as provided under the scheme permitted by the RBI,” the company said in a regulatory filing.
The company added that in its meeting held on Monday it has issued equity shares proportionately to all the lenders. “As per the SDR scheme, of the total outstanding debt (including overdue interest) of R3,780 crore, debt to the extent of R1,414 crore has got converted into equity by which the consortium lenders would have 55% shareholding and balance 45% would be held by GMR,” it said.
Post conversion, balance debt of around R2,366 crore is to be repaid in 20 years, six months comprising a moratorium of 21 months at an interest rate of 10.75%. “After SDR, the total equity in the project would be R2,571 crore resulting in the debt-to-equity ratio of 0.9. The lower debt levels coupled with reduction in interest cost would result in improving the long term viability of the project,” the statement said.
An SDR allows banks to convert debt at a price below the current market value and they can now own at least 51% or more of the equity of a 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.
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, Gammon India among others.