ITPCL, the power arm of Infrastructure Leasing and Financial Services (IL&FS) in Cuddalore, Tamil Nadu, has received the lenders’ approval to restructure its debt of Rs 5,500 crore and is awaiting the NCLAT’s go-ahead. The leasing firm will later put the power subsidiary up for sale.
Nand Kishore, the whole time director on the board of IL&FS, said in a quarterly update on the resolution process that they have received the RBI and creditors’ approval to restructure the ITPCL loan, and have now approached the NCLAT for approval. “Following the restructuring, ITPCL will start to service the debt and will be put on block for sale thereafter,” Kishore said.
According to sources close to the development, the lenders agreed to the restructuring after IL&FS received close to Rs 1,200 crore of the Rs 2,000 crore pending receivables from the Tamil Nadu discom. The amount was pending due to the discom’s financial weakness and inability to borrow from the first tranche of Rs 90,000 crore approved by the central government through PFC and REC.
However, some of the discoms who exhausted their borrowing limits during the financial year were given a one-time waiver under the FRBM Act to borrow from the PFC and REC fund.
“The restructuring will be for Rs 2,600 crore of the debt as the sustainable portion, while the remainder of around Rs 2,900 crore will be the unsustainable portion. The unsustainable part will not be written off, but over the tenure of the loan, it can be paid off from future cash flows,” sources said.
IL&FS Tamil Nadu Power Company operates a 1,200-MW imported coal-based plant in Cuddalore. Around Rs 10,600 crore was invested in the project, financed by Rs 6,080 crore in loans from public sector banks and Rs 4,560 crore in equity by IL&FS Energy Development, a group subsidiary.
ITPCL was taken for insolvency proceedings by SBI and other public sector banks in September 2018 on technical reasons as the lenders expected the company to default on its dues.
IL&FS has also identified an H1 bidder for the sale of 26% stake in the ONGC Tripura Power Company, the 1200-MW gas based project. “The company is currently negotiating an improved value for the project, based on fair market valuation,” CS Rajan, managing director of IL&FS, said.
According to sources, GAIL has shown interest in buying the stake.
IL&FS has also initiated a preliminary discussion with the Rajasthan government for the sale of its 50% stake in the joint venture with the state. “We have engaged with the government to either buy our stake or to sell the entire 100% of the stake to a third party,” Rajan said.