Lanco aims to raise up to $1 billion, shares soar on return to profit

By Tommy Wilkes

NEW DELHI (Reuters) - Lanco Infratech Ltd is looking to raise as much as $1 billion over the next 18 months through a stake sale and a listing of its power assets as it seeks to pare back a heavy debt load, its chief financial officer said.

The news comes as the independent power producer swung back to profit in the June-September quarter, sending its shares surging by a fifth in afternoon trade.

Lanco has some $5.3 billion in debt and has been losing money in recent years as its plants have been stalled due to delays in regulatory clearances and obtaining coal.

"It could be a strategic investor (for a stake sale). We'd also like to list Lanco power (assets)," CFO T. Adi Babu told Reuters in a telephone interview, adding that the company was hoping to raise between $750 million and $1 billion from these measures.

It also hopes to sell one large power project in 2017 once all its plants are fully operational.

"We want to sell one big asset to bring down debt and improve liquidity. There's a good prospect we can sell at least one asset," Adi Babu said.

Lanco has been working with its bankers to restructure its debts, and Adi Babu said its lenders had started releasing funds to help it restart work at stalled plants.

The company now operates 4,000 megawatts (MW) of power assets and expects to complete another 4,000 MW in around two years, which will involve its debt rising to 450 billion rupees before it starts falling.

Lanco said the outlook for its power business was improving as coal availability has increased and it has sealed power purchase agreements with consumers.

It reported a quarterly net profit of 989 million rupees ($14.9 million) during the June-September quarter on Monday, against a 5.3 billion rupee loss a year earlier.

India's indebted power companies have been struggling in recent years as an economic downturn and delays to projects crimped revenue.

Adi Babu added that Lanco still wants to sell its Griffin coal mine in Australia, which it put on the block last year, but the company is unlikely to find a decent bidder until international coal prices recover.

($1 = 66.3750 Indian rupees)

(Reporting by Tommy Wilkes; Editing by Sumeet Chatterjee and Edwina Gibbs)