Wednesday, September 10, 2014

Lanco Infra to sell 3000 mw power assets to retire part of debt

BL 9 Sep 14
Lanco Infratech Limited has decided to sell up to 3000 mw of power generation assets to raise up to Rs.15000 crore in cash and thereby retire part of the company debt of over Rs. 36,000 crore.
The company had recently divested the 1320 mw Udipi thermal power plant to Adani Group entity for Rs.6,000 crore and Budhil hydel project earlier for Rs. 650 crore to Greenko and about 10 mw of wind generation assets, all with a view to bringing down its piled up debt.
Faced with the challenge of mounting debt and the huge financial commitments to serve the growing debt and poor cash flows due to delays in project implementation impacted by macro economic issues, the diversified infrastructure company has decided to sell several of its assets.
According to the company senior official, since last one year, the company has been working on each of the projects to settle the issues and bring back viability. This includes a major Corporate Debt Restructure process where a clutch of over 25 lenders have agreed to restructure the loans and have laid down certain conditions, including sale of assets to free up equity and pay the debt.
Some of the bankers are keen at early sale of assets so that the debt burden could be brought down, freeing up equity for ongoing projects.
The company has a portfolio of 4732 mw under operation, 4636 mw under construction and around 9000 mw at various stages of development.
Lanco Infra could not mobilise additional funds due to the tough economic scenario and capital markets. Even the overseas investors are treading cautiously on investments in the power sector due to inherent problems faced by the power sector, including fuel supplies and delayed payments by Discoms.  

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