Banks are set to finalise deals for about a dozen stressed power projects with more than 13,000 mw capacity within the next 10 days even if they have to take steep haircut, people familiar with the development said.
Bidders in fray for one or more power plants being expeditiously auctioned include Adani Power, Vedanta Plc, JSW Energy, Edelweiss, Bank of America, Merrill Lynch, Resurgent Power, Lone Star-IL&FS and JM Financial.
The lenders have set August 14 deadline to sign the deals or decide to take the projects to insolvency court, sources said. Lenders have unanimously decided that stressed power projects fetching above Rs 3 crore per mw in auctions — which translate to recovery of just about 50% of their exposure — be sold off.
They have also signed an inter-creditor agreement to reach quick resolution for stressed power plants ahead of the August 27 deadline the Reserve Bank of India has set for resolution of stressed assets, sources said. At an all lenders meet in Mumbai on Monday it has also been decided that offers from bidders fetching 60% of the outstanding principal excluding interest during construction for the delayed period be accepted, people familiar with the development said.
Preference will be given to all-cash offers and successful bidders will have to make a minimum 20% upfront payment as guarantee to close the deals. Also, the resolution plans must have received RP4 rating — moderate degree of safety on financial obligations — by an independent rating agency as provided in a February 12 circular issued by the central bank.
Negotiations are on for at least six power projects, including KSK Mahanadi where bidders are being given 48-72 hours deadlines to improve offers, sources said. Lenders have also decided to drag a minimum of four projects to insolvency court National Company Law Tribunal (NCLT), they said.
Resolution looks close for the 600-mw Avantha Power (Jhabua) project in Madhya Pradesh for which negotiations are on with Edelweiss Asset Reconstruction Co (ARC), Adani Power, Resurgent Power Ventures Pte Ltd and Phoenix ARC. Offers received from bidders meet the basic principles laid down in a meeting held by State Bank of India in Mumbai on Monday, sources said.
The 1,440-mw RKM Powergen project is so far the only one project in which the debt will be restructured with existing promoters and the resolution plan is likely to be finalised within this week.
Lenders to 2,400-mw KSK Mahanadi plant in Chhattisgarh are negotiating with Vedanta Plc and Adani Power to improve their offers in the next 2-3 days. Deal for Jaiprakash Associates’ project Prayagraj PowerGen is also likely to be finalised soon as the project has received viable offers from bidders, sources said.
In case the offers do not match the guiding principles, projects will be moved to NCLT. Projects that have already been decided to be taken to the insolvency court include 1,200-mw Lanco Anpara in Uttar Pradesh and 1200-mw Jindal Indian Thermal.
Source: July 27, 2018, Economic Times