GMR Infrastructure Ltd. announces strategic debt restructuring of project SPV

GMR Group has announced that considering the absence of long term Fuel Supply Agreement (FSA) and long term Power Purchase Agreements (PPA) for the GMR Rajahmundry Energy Limited (GREL) Special Purpose Vehicle, the consortium of lenders of GREL have adopted the Strategic Debt Restructuring Plan (SDR), as provided under the scheme permitted by the Reserve Bank of India (RBI).

Accordingly, GMR Group, the global infrastructure conglomerate with interests in airport, energy, transportation and urban infrastructure has issued equity shares proportionately to all the lenders of the special purpose vehicle.

The SPV manages the 768 MW (2x384 MW) natural gas based Power Plant in District Rajahmundry, Andhra Pradesh. Though the project was completed in 2012, the commissioning of the project was delayed due to unavailability of gas supply on account of unprecedented fall in gas production in KG-D6 basin which led to cost over-runs. The project was fully commissioned in the month of July 2015.

As per the SDR scheme, out of the total outstanding debt (including overdue interest) of INR37.8 billion (US$565) debt to the extent of INR14.14 billion (US$211 million) has got converted into equity by which the consortium lenders would have 55% shareholding and balance 45% would be held by GMR Group.

Post conversion, balance debt of around INR23.66 billion (US$350 million) would be having repayment period of 20.5 years comprising of moratorium of 1. 75 years and interest rate of 10.75%. After SDR, the total equity in the project would be INR25.71 billion (US$385 million) resulting in the debt-to-equity ratio of 0.9x.

The lower debt levels coupled with reduction in interest cost would result in improving the long term viability of the project.