Reliance Power Sweetens Debt Settlement Offer For Vidarbha's Lenders

Reliance Power, which counts Anil Ambani as a promoter, has made an improved debt-settlement offer of ₹1,260 crore to the lenders of its subsidiary, Vidarbha Industries Power.

What Happened? Competing bidder CFM Asset Reconstruction Co had initially proposed ₹1,120 crore, while government-owned National Asset Reconstruction Company (NARCL) had offered ₹1,150 crore, and Reliance Power proposed a settlement of ₹1,200 crore, the Economic Times reported, citing sources.

Reliance Power and CFM ARC made cash offers, while NARCL’s offer was a mix of cash and security receipt.

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Vidarbha, an entity that owns a 600 megawatt coal-based project in Nagpur, has faced operational challenges since January 2019. Delays in regulatory orders and fuel supply shortages for one of its units have rendered the project non-operational, leading to a lack of power sales and financial difficulties for the company.

CFM ARC recently upped its offer to ₹1,220 crore, and Reliance Power revised its offer to ₹1,260 crore, with support from Varde Partners, which acquired a 15% equity stake in the firm by investing ₹930 crore in September last year.

The battle for control over Vidarbha Industries is headed to be decided when lenders auction the company’s loans. Both Reliance Power and CFM ARC have suggested that their offers be treated as anchor bids at the Swiss challenge auction, which would give them the first right to counter any new bids.

Lenders, including State Bank of India, Axis Bank, Bank of Baroda, Punjab National Bank, Canara Bank, and Bank of Maharashtra, will collectively decide on the proposals from the promoter and the two ARCs in the upcoming week.

ICRA Ratings has given the company’s ₹3,646 crore debt a “D” (default) rating, although sources indicated to the business publication that the firm’s outstanding loans have reduced to ₹2,200 crore.

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Posted In: NewsFinancingCommoditiesMarketsReliance PowerVarde PArtnersVidarbha Industries Power