GMR Rajahmundry Energy executes bank-led resolution

New Delhi  :  In a major development post Supreme Court's declaration of the RBI circular on NPAs as ultra vires, GMR Infrastructure on Friday announced the successful execution of the resolution plan between its associate company, GMR Rajahmundry Energy and it lenders.

The existing debt of the company has been brought down to a sustainable debt of Rs 1,412 crore from 2,353 crore, GMR Infrastructure said in a statement.

"Against above sustainable debt of Rs 1,412 crore, GMR Group has already infused an amount of Rs 395 crore towards meeting 20 per cent of principal towards repayment of the sustainable debt and the interest servicing obligations of GREL for the first year," it said.

"This leaves balance outstanding sustainable debt of Rs 1,130 crore carrying a floating rate of 9 per cent p.a repayable over 20 years."

The balance debt of Rs 941 crore has been converted into Long Dated Cumulative Redeemable Preference Shares (CRPS) carrying 0.1 per cent which is repayable from 17th to the 20th year, according to the company.

Grandhi Kiran Kumar, MD and CEO, GMR Infrastrucure said: "The first-of-its-kind resolution plan offers a mutually beneficial resolution for both lenders and the company through a long-term solution for the existing debt and related obligations of the group."

GMR said the company remains confident of availability of gas in years to come ensuring "good performance" of its Rajahmundry plant and thereby meeting obligation towards both its sustainable as well as long dated preference shares.

GMR Group and the lenders continue to own 45 per cent and 55 per cent of shareholding respectively in the plant.

The Rajahmundry plant was among the power assets which were impacted due to the the Reserve Bank of India's (RBI) February 12, 2018 circular that said in the pre-Insolvency and Bankruptcy Code (IBC) stage, if a commercial entity is in default on a loan of Rs 2,000 crore or more even for a day, the bank would initiate steps for resolving, including restructuring the loan.

Sources said the bank-led resolution was halted after the RBI's circular came into effect, but was resumed as the apex court struck the order in April 2, 2019.