Greenko plans to raise Rs 2,500 cr via NCDs for solar power units

The company will issue new debentures for this amount, to retire existing non-convertible debentures to the tune of Rs 2,655 crore

Singapore’s sovereign wealth fund GIC-backed Greenko Holdings is planning to raise Rs 2,500 crore via non-convertible debentures (NCDs) to retire existing debt for 10 solar power generating units. It will issue new debentures for this amount to retire existing NCDs worth Rs 2,655 crore.

These units, organised as special purpose vehicles (SPVs), run 10 solar power generation units of 50 Mw each at Kurnool Solar Park, Andhra Pradesh.

Greenko Group is a renewable independent power producer, having an operational capacity of 4.4 Gw and under construction capacity of 2.6 Gw across in India. The group’s holding company Greenko Energy Holdings is backed by GIC, Singapore’s sovereign wealth fund, and Abu Dhabi Investment Authority.

India Ratings assigned “AA+” rating to the proposed NCDs of Zuvan Energy, one of the 10 SPVs.

The rating is anchored by 25-year power purchase agreements (PPAs) — one for each project — with NTPC for 100 per cent of the project capacity (500 Mw) at a fixed tariff of Rs 4.63 per unit. The projects became operational on March 30, 2017.

The proposed NCDs will be repayable over 20 structured semi-annual instalments, with the last payment being a bullet payment of 16.8 per cent of the total issuance amount.

The refinancing risk at the end of the tenor of the NCDs is mitigated by a firm PPA of 25 years with a strong counterparty (NTPC).

The management expects the refinancing to be at a reduced fixed coupon rate (payable semi-annually). Any material change in the terms and conditions of the proposed term loan can have a bearing on the rating.

Furthermore, the project has standard project finance features, including a cash flow waterfall, a debt service ratio (DSR) equivalent to six months’ principal and interest payments, and a cash reserve, the rating agency said.

The projects, on a consolidated basis, reported revenue of Rs 589.9 crore with operating profit at Rs 546.7 crore in FY20. 

In FY19, the revenue was Rs 591.9 crore and operating profit Rs 540.6 crore.

According to the financing documents, each project will give a corporate guarantee of Rs 3,000 crore to the NCD holders.

For the existing debt, all projects have created next six months’ DSR (maintained in the form of fixed deposits) and one month of debenture redemption reserve, according to the financing documents stipulation.

In addition, on a consolidated basis, the structure had unencumbered cash of Rs 247.9 crore or additional nine months of debt servicing, as of September 30, 2020.