Lenders scout for new owner for JP Group arm Prayagraj Power

A State Bank-led consortium of lenders has invited bids to sell majority stake in debt- ridden Prayagraj Power Generation Company (PPGCL), an arm of Jaiprakash Power Ventures.

The company owes over Rs 11,000 crore to 17 lenders led by SBI, PNB, BoI, IOB, IDBI Bank, Indian Bank, LIC, and L&T Infrastructure Finance among others apart an external commercial borrowing of USD 115 million from IIFCL of Britain.

The lenders have appointed SBI Caps to select an investor/s or buyer and subsequent change in the ownership of the company.

The company is not part of the NCLT accounts, but the holding company Jaiprakash Associates is part of the 28 large accounts mentioned in the second RBI list. The lenders are in the process of finding a resolution to this account outside National Company Law Tribunal.

"Transaction entails induction of a strategic or financial investor or bidder in PPGCL to take over majority shareholding, held by the security trustee on behalf of the lenders," SBI Cap said in a public notice.

The 17-lender consortium holds 89.47 per cent in PPGCL and the balance is with Jaiprakash Associates, the promoter entity.

In July 2016, the lenders had invoked strategic debt restructuring (SDR) of Jaiprakash Power but the company stopped servicing its term loans from February 2017.

Debt on its book may be refinanced based on discussion/ proposal submitted by the prospective investors, according to the expression of interest put out by SBI Caps.

The company has a 1,980-mw coal based super-critical thermal power project at Bara near Allahabad, which had achieved commercial operation date in May 2017.

Due to inadequate working capital and increase in interest liability on the working capital loans, the company had reported a net loss of Rs 546 crore in FY17 which in the first half year of the current fiscal jumped to Rs 629 crore.