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1967Mw Dabhol power plant lenders propose partial conversion of debt into equity

  • Lenders to the now closed 1,967 MW Dabhol project has proposed conversion of its partial debt into equity to avoid its declaring it non-performing asset (NPA). Lenders have suggested this way out after Ratnagiri Gas & Power Pvt Ltd (RGPPL), which operates the project, has defaulted in its debt servicing in June. Lenders want conversion of debt into equity equivalent to the interest dues worth Rs 405 crore. As of now the RGPPL's equity is worth Rs 2,965 crore. The equity holds include NTPC (32.86%), GAIL India (32.86%), IDBI Bank, ICICI Bank, SBI, Canara Bank together (16.87%) and MSEB Holding Company (17.4%). With the conversion of debt into equivalent to interest dues of Rs 405 crore, the equity will increase to Rs 3,370 crore.

  • RGPPL official, who did not want to be named, told Business Standard: ' The board has already discussed the matter. MSEB Holding Company is opposed to the conversion of debt into equity while other stake holdes have given their consent. RGPPL desperately needs cash for debt servicing and also for expenses required for wages and Dabhol plant maintenance.'' The official said if RGPPL is unable to mobilize cash at the earliest it may have to cancel plant servicing and maintenance contracts. He added that the project, which has been closed since December 28, urgently needs restoration of gas supply. The official confirmed that it was opposed to lenders' proposal for converting debt into equity at par. ''The MSEB Holding Company may be short changed since value of its holding is diluted and lenders get the benefit when the financial health of the RGPPL improves." When the Dabhol project restructuring took place in 2006, MSEB Holding Company received the equity at premium to the face value

  • Further, RGPPL has already launched repatriating its staff to their parent companies. NTPC has already repatriated 13 of its total 72 employees at the project site and deployed them in its various plants. Another 15 NTPC employees will be sent back to various plants. As reported by BS, the project would have turned NPA in March but that was averted after RGPPL repaid Rs 150 crore received from MahaVitaran. RGPPL, which is facing a severe financial crunch, paid Rs 90 crore each to lenders in April and May but defaulted in June. The company has also defaulted on debt repayment to Power Finance Corporation. The RGPPL official informed that of the total debt of Rs 8,500 crore, so far, it had repaid Rs 4,000 crore to Dabhol project lenders since the project was revived in April 2006.

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