GMR Rajahmundry Energy’s Debt Resolution Plan Accepted By Lenders

GMR Infrastructure Ltd. said its associate company GMR Rajahmundry Energy Ltd.—a debt-laden 768 megawatt natural gas-based power plant in Andhra Pradesh—has worked out a debt resolution plan, which has been accepted by all its lenders.

According to press statement issued by GMR Infrastructure, GMR Rajahmundry Energy’s existing debt of Rs 2,353 crore has been brought down to Rs 1,412 crore. The remaining balance of Rs 1,130 crore will carry a floating rate of 9 percent per annum repayable over 20 years.

Against the Rs 1,412 crore debt, GMR Group has already infused an amount of Rs 395 crore towards meeting 20 percent of principal towards repayment of the sustainable debt and the interest servicing obligations of GREL for the first year, GMR said.

The balance debt of Rs 941 crore has been converted into Long Dated Cumulative Redeemable Preference Shares carrying 0.1 percent--repayable from the 17th to the 20th year, GMR said.

According to Kiran Kumar Grandhi, managing director and chief executive of GMR Infra, “the first of its kind” debt resolution plan offers a mutually beneficial resolution for both lenders and the company through a long-term solution for the existing debt and related obligations of the group.

"It has reduced the debt for GMR Group and we believe this will de-risk the group substantially. This also offers quality assets built on the ground an opportunity to perform to its potential," Grandhi said. “GMR remains confident on availability of gas in years to come, ensuring good performance of its Rajahmundry plant, and thereby meeting obligation towards both its sustainable as well as long-dated preference shares.”

GMR believes that gas-based power plants will provide peaking power support to the country's growing renewable energy sector, Grandhi said, adding that the debt resolution plan will be mutually rewarding to GMR Group and lenders, which hold 45 percent and 55 percent respectively in GMR Rajahmundry Energy.

The lenders to GMR Rajahmundry Energy, which was saddled with Rs 2,366 crore debt in May 2016, exercised the Reserve Bank of India’s strategic debt restructuring norms for resolution.

The construction of GMR Rajahmundry Energy was completed in 2012, but the commissioning of the project was delayed due to unavailability of gas after unprecedented fall in gas production in the KG-D6 basin.

The project was fully commissioned in Oct. 22, 2015.