Led by Power Finance Corporation (PFC), lenders to KSK Mahanadi Power — a thermal power project of KSK Energy Ventures in Chhattisgarh with debt of Rs 18,551 crore — are seeking a buyer for the project, a document inviting bids showed. “SBI Capital Markets Limited has been mandated by Power Finance Corporation (on behalf of the consortium of lenders of the company) to identify a strategic investor to effect change in ownership and management control of a 3,600 MW (6×600 MW) coal based thermal power project using sub-critical technology in the state of Chhattisgarh,” the document said.
According to it, of the total capacity, 1,800 MW (3×600 MW) has been commissioned and is currently operational while another 1,800 MW (3×600 MW) of capacity is under implementation. Attempts by the management of the company to sell the project to possible buyers over a year ago failed to attract any interest. This time around, though, the response may be different as the lenders may be more open to making certain concessions to attract the right suitors.
The company is promoted by KSK Energy Company (4.55% stake), KSK Energy (26.31%) and KSK Power Holdings (4.63%). The company reported a net loss of Rs 88 crore on the back of Rs 20 crore in total income in FY17, primarily owing to an interest outgo of Rs 133 crore. In the three months to December 2017, it reported a net loss of Rs 32 crore on a total income of Rs 5 crore. Apart from seeking investors for the project, lenders also plan to change the management of a subsidiary which is implementing the raw water intake system for the project, and that of an associate developing the railway siding outside the plant boundary.
In April, KSK Energy Ventures had said in a regulatory filing that the group expects to engage actively with private equity and India-focused infrastructure and special situation funds to partner with them to address the emerging situation and financing requirements.
It had said that following the circular of Reserve Bank of India (RBI) on stressed assets “the balance has tilted in favour of the project lenders for appropriate resolution plan approvals, at each of the project companies, impacting the existing sponsors continuing alongside the new investors in resolving the stress as well as the business challenges and participation in the value creation ahead”. The company had said that KSK Mahanadi, where approximately $0.5 billion of equity and $3 billion of debt has been invested over the years, operational output currently is only 1,800 MW.
“However, the new regulations and resolution framework expose the equity of the group to any decision of the project lenders at KSK Mahanadi to reorganise their $3 billion of debt that includes over $1 billion of accumulated interest during construction over the years,” it had said, adding that KSK Mahanadi has unpaid engineering, procurement and construction creditors and until further funding for capital expenditure is resolved, there are likely to be delays associated with developing the fourth 600 MW unit.