Lanco may sell majority stake in coal projects to pare debt

Debt-laden Lanco Infratech may spin off its coal power projects into a single holding company and then may sell majority of it to OPG Power Ventures to ease the burden, sources close to the development said today.
Sources also said the creation of new entity will be completed by the end of this calendar year.
As part of the agreement with lenders, Lanco Anpara (2X600 mw) will be put on sale and the proceeds will be used to complete unfinished power projects.
"The enterprise value of the total basket of the power projects (both under-construction and operating) will be about Rs 5,300 crore. Lanco is in discussions with OMG to offload 51 per cent stake. Lanco will also put up Lanco Anapara (1200 mw) for sale. The sale amount will be pumped into completing the projects under-construction," sources said.

Lanco has about 4000 mw thermal power projects under construction -- (Lanco Amarkanta 3 and 4 -1320 mw, Lanco Babandh-1320 mw, Lanco Vidarba-1320 mw) -- and the progress of those projects is getting delayed for variety of reasons.
The spin off entity will have all the above mentioned three projects and 1,800 mw operational projects Amarkanta I and II and 1,200 mw Anpara project.

Lanco Infratech has about Rs 7,000 crore plus debt at corporate level.
"The whole proposal was approved by the lenders also," sources added.
OPG Power will bring in Rs 150 crore as equity for 51 per cent of the stake, they added.

Addressing shareholders at the annual general meeting today, Lanco Infratech chairman L Madhusudhan Rao said the management is in continuous touch with lenders and "Strategic/ Financial investors" to augment the cash capacities.
He said they are confident of tying up funds for completion of the under construction projects which will give value to all stakeholders.
He, however, declined to answer a shareholder's question on reports that OPG Power Ventures is acquiring stake.
"Sale of Anpara power project will be done next year," sources further said, adding Anpara Project is valued at Rs 1,600 crore.
The sale proceeds of Anpara and Rs 150 crore which will be pumped in by OPG Power would be sufficient to meet the entire equity requirement for the new entity, sources explained.