GMR Infra announces resolution for Rajahmundry gas power plant

GMR Infrastructure Limited (GIL) announced execution of resolution plan for its stressed GMR Rajahmundry Energy Limited (GREL) – 768 MW gas-fired power plant in Andhra Pradesh. The company informed the exchanges on Friday morning that it has paid a portion of the sustainable debt of the project.

The resolution plan which has been approved by the lenders of the project consisted of reduction of total debt of Rs 2353 crore to sustainable debt of Rs 1412 crore. “Against the above sustainable debt GMR Group has already infused an amount of Rs 395 crore towards meeting 20 per cent of principal towards repayment of the sustainable debt and the interest servicing obligations of GREL for the first year,” GIL said in its statement.

For the balance Rs 1130 crore, it will be repayable at 9 per cent over 20 years.  The lenders have converted the remaining existing debt of Rs 941 crore into Long Dated Cumulative Redeemable Preference Shares (CRPS) carrying 0.1 per cent which is repayable from 17th to the 20th year, said the company’s statement.

“The first of its kind 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 Kiran Kumar, Managing Director & CEO, GIL said.

Last year, a consortium of lenders led by IDBI Bank had put on sale 55 per cent stake in a GREL which they acquired in 2016 following debt restructuring. GMR Group and Lenders as they continue to own 45 per cent and 55 per cent of shareholding respectively.

The company which faced debt payment and operational issues due to non-availability of gas, the company in its statement said it remains confident of 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 non-conventional energy of wind and solar power, and the Resolution Plan shall be mutually rewarding to the lenders, it said.