Reliance Power's subsidiary Rosa prepays Rs 850 cr debt to Varde Partners

Rosa Power, a subsidiary of Reliance Power, has prepaid Rs 850 crore debt to Singapore-based lender Varde Partners as part of its efforts to clear liabilities ahead of schedule, according to a company statement.

The prepayment brings Rosa Power closer to achieving zero debt, following its parent company’s debt-free status earlier this month.

The Uttar Pradesh-based coal plant operator is targeting complete debt clearance by the end of the financial year, with plans to settle its remaining obligations in the next quarter.

Rosa Power, which operates a 1,200 MegaWatt (MW) coal-based thermal power plant in Shahjahanpur, is now on track to strengthen its balance sheet further, supporting the parent company’s pivot towards new growth areas like the renewable energy sector.

The move comes as Reliance Power plans bolsters its financial position through a Rs 1,525 crore preferential issue, approved by the board earlier this week, with over Rs 600 crore coming from Reliance Infrastructure and the remainder from Authum Investment and Infrastructure and Sanatan Financial Advisory Services.

The energy company had earlier outlined its plans to use the proceeds from the issuance to fund expansion efforts directly and through subsidiaries and joint ventures, adding that the capital raised will also be used for reducing existing debt and for general corporate purposes.

The preferential issue is expected to boost Reliance Power's net worth from Rs 11,155 crore to over Rs 12,680 crore, maintaining its zero-bank-debt status, according to the statement. The capital infusion and debt reduction are expected to provide Reliance Power with the flexibility to explore new business avenues, especially as the company looks to expand into the renewable energy sector.

The company had taken a debt of about Rs 1,000 crore from Varde Partners in 2022, as part of a refinancing arrangement aimed at reducing its overall borrowing costs and managing liquidity.