Smoke rises from a chimney at the Tata Power Co. Trombay Thermal Power Station in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Hedge Fund-Backed Rattan Close to $500 Million Debt Revamp

(Bloomberg) -- RattanIndia Power Ltd., a electricity generator backed by hedge fund Farallon Capital Management, is close to restructuring about $500 million of stressed loans, according to people with knowledge of the matter.

The company, which is building coal-fired power plants to produce 5,400 megawatt of electricity -- enough to light up 7 million rural homes in India -- has offered to pay banks 52 percent of the obligations of its project in Amravati in Maharashtra state, the people said. The talks with creditors are on-going and there’s no certainty they will result in a transaction, according to the people, who asked not to be identified because the discussions are private.

Varde Partners Inc.’s local venture with billionaire Kumar Mangalam Birla’s company is helping RattanIndia founder Rajiv Rattan fund the so-called one time settlement, the people said. The deal will be the first for Aditya Birla Asset Reconstruction Co., one of the people said. Rattan and a spokeswoman at Aditya Birla Group didn’t respond to emails seeking comment.

A resolution outside the bankruptcy process may accelerate the revival of the project. The nation’s power industry accounted for 5.65 trillion rupees ($79 billion) of loan exposure as of March, including debt that would be considered delinquent under new rules, according to a report by a lawmakers’ panel. Concerns about slow resolutions have stifled investment in the industry at a time when demand for electricity is rising 6 percent a year.

RattanIndia is developing coal-fired power projects in Amravati and Nasik in Maharashtra state. The company, formerly known as Indiabulls Power Ltd., has about 82 billion rupees of debt, according to the people. The company’s shares have dropped about 58 percent this year.

Lenders led by State Bank of India have sought to sell the assets to see if they can get a better value, according to the people. The creditors issued an advertisement this month seeking bids.

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