GMR Warora Energy signs pact with lenders to recast Rs 3,000 cr loans

GMR Warora Energy Ltd has signed a debt restructuring agreement with a group of lenders led by State Bank of India and Axis Bank, for loans over Rs 3,000 crore. The ailing power company is owned by BSE-listed GMR Power and Urban Infra Ltd (GPUIL).

Loans would be repaid progressively over 15 years, giving the company additional time of about seven years to extinguish the liability, GPUIL informed BSE.

Lenders that signed the inter-creditor agreement have approved the Resolution Plan, which came into effect on April 1, 2021. The agreement was hammered out under the Reserve Bank of India’s Framework for Resolution of Stressed Assets, 2019.

GMR Warora is a special purpose vehicle (SPV) promoted by the GMR Group for the development of a 600-Mw (2x300 Mw) domestic coal-based thermal power plant at Warora in Maharashtra. Unit-I of the power plant was initially scheduled to be commissioned by August 2012 but eventually became operational in March 2013. Unit-2 was commissioned in September 2013.

According to the terms of the agreement, the existing working capital facilities of Rs 580 cr sanctioned by the working capital consortium will continue. The existing credit has been divided into two buckets – sustainable loans and unsustainable credit.

The interest rate on the sustainable debt, amounting to about Rs 2,350 crore, will be revised to 8.5 per cent and the unsustainable debt (including accrued interest) amounting to Rs 788 crore will carry an interest rate of 0.01 per cent, it said.

The proposed debt resolution plan has been assigned RP4 rating by Crisil and CARE Ratings. Debt rated RP4 is considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such debt facilities/instruments carry moderate credit risk.

CARE Ratings said GWEL has a weak financial risk profile marked by high overall gearing and moderate debt coverage indicators. Its overall gearing deteriorated from 7.18x on March 31, 2020 to 8.55x on March 31, 2021. This was largely due to an increase in total debt and erosion in net worth caused by losses during FY21.

The power utility also faces counterparty credit risks leading to delay in receivables. It supplies power to Maharashtra State Electricity Distribution Company Limited (MSEDCL) and Tamil Nadu Generation and Distribution Limited (Tangedco).

The coal for the plant has been tied up under a Fuel Supply Agreement for the entire capacity of the plant with South Eastern Coalfields Ltd (SECL).