Reliance Power (RPower) on Friday informed the stock exchanges its lenders entered into an inter-creditor agreement (ICA) last week, kicking in a six-month standstill period to resolve its debt issues. The announcement comes a day after Reliance Infrastructure (RInfra) made a similar announcement.
Lenders to Vidarbha Industries Power (VIPL), a subsidiary for RPower, also signed the ICA, giving the Maharashtra-based power plant 180 days time to implement a resolution plan.
“RPower’s six lenders have signed the ICA on July 6. According to the RBI Circular of June 7, 100 per cent of its lenders have signed the ICA for the resolution of RPower’s debt,” the company said in a statement. An ICA allows for all lenders to decide a resolution for the company’s debt collectively. Individual creditors cannot take any separate action in relation to the debt given and collateral taken from the company.
The company in its announcement said: “RPower and VIPL will achieve resolution plans well before 180 days period.” The company, however, did not share any asset monetisation or other plans to achieve this resolution.
With this announcement, three of Reliance Group’s four main listed entities are now at various stages of debt resolution. In May 2019, the National Company Law Tribunal (NCLT) started bankruptcy process against Reliance Communication. On Thursday, RInfra’s entered an ICA for the company’s Rs 5,900 crore worth of standalone debt. RInfra and RPower’s debt, however, at present is being resolved under Reserve Bank of India’s revised circular for stressed assets.
For the March 2019 quarter, RPower reported a loss of Rs 3,558.51 crore due to impairment taken for its gas-based power and solar assets. Auditors to RPower also flagged concerns over withdrawal from general reserves, depreciation methods and certain related party loans. For the last one year, VIPL has been struggling with lack of coal supply leading to lower power generation.
In a June 18 report, ICRA Ratings had said: “The liquidity profile of RPower’s key operating subsidiaries, namely Rosa Power Supply Company and VIPL, continues to remain weak, which, in turn, has impacted the surplus cash flow availability to the company.” The report also pointed out delay in debt servicing by one of RPower’s subsidiary — Rajasthan Sun Technique. Part of the debt restructuring, RPower on Thursday said it recast Rs 2,430 crore worth of debt for its Samalkot power project with US-EXIM, extending its final maturity to June 2022.