Reliance Power offers Rs 1,200-cr settlement to lenders of Vidarbha Industries Power: Report

Anil Ambani-promoted Reliance Power Ltd on Monday proposed a one-time settlement (OTS) to the lenders of Vidarbha Industries Power of Rs 1,200 crore to settle its debt, said a report on Monday.

The OTS offer of Reliance Power was supported by investment firm Varde Partners, reported Economic Times on sources.

As per the proposal, Reliance Power has offered to settle Rs 1,200 crore to the lenders of Vidarbha Industries, which include Axis Bank, State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank and Bank of Maharashtra.

Reliance Power entered into an indicative Memorandum of Understanding (MOU) in September 2022 with Varde Partners for availing debt of up to Rs 1,200 crore “for settlement and discharge and/or acquisition and restructuring of certain financial debt availed by Reliance Power”.

In July 2021, Varde Partners also invested Rs 550 crore in Anil Ambani-promoted Reliance Infrastructure.

Vidarbha Industries Power Limited (VIPL), a subsidiary of Reliance Power Limited, belongs to the Reliance Group promoted by Mr. Anil D Ambani. It operates a domestic coal-based project with a capacity of 600 MW at the Butibori Industrial Area in Nagpur, Maharashtra.

The outstanding loan of Vidarbha stood at Rs 2,216 crore as of March 31, 2022, according to Reliance Power’s annual report. The company’s total borrowing including short-term and long term is Rs 3,264 crore, according to Investment Information and Credit Rating Agency (ICRA) report released on Feb 1, 2023.

VIPL owns a domestic coal-based project with a capacity of 600 MW at the Butibori Industrial Area in Nagpur that has remained non-operational from January 15, 2019 due to protracted delays in issuing regulatory orders and lack of fuel supply for one of the units, said the ICRA report.

Subsequently, there has not been any income from the sale of power, which has impacted the company’s accruals and has resulted in continuing delays in its debt servicing obligations, the report added.

VIPL’s liquidity position is also poor as reflected in the ongoing delays in debt servicing.

A part from the proposal of Reliance Power, two more offers were made to the lenders.

CFM Asset Reconstruction made an all-cash offer of Rs 1,120 crore while National Asset Reconstruction Company (NARCL) also made an offer of Rs 1,150 crore with 15% cash upfront to the lenders at Vidarbha Industries. The remaining balance will be paid over the next five years by NARCL.

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