Lenders disagree over Jindal India Thermal debt resolution offer

NEW DELHI: Jindal India Thermal Power’s debt resolution process has stalled as its 17-member lenders consortium has failed to reach a consensus on an offer from its promoters to repay Rs 2,450 crore, people aware of the matter said.

Some lenders in the consortium refused to sign an inter-creditor agreement that would have paved the way for the firm’s financial reconstruction, these people said.

The company owes banks Rs 7,000 crore. Opposing lenders — that mainly comprise private sector banks — are demanding better financial terms and want promoters to increase their offer to match existing thermal company valuations.

“The recent deals for resolving stressed thermal power companies have valued them at around Rs 3 crore per megawatt. Jindal’s offer values the company at Rs 2 crore per megawatt. There is a gap that they need to bridge,” one executive familiar with the discussions said.

A Jindal India Thermal executive declined to comment when contacted. Jindal India Thermal Power is promoted by Shyam Sunder Jindal, a cousin of Sajjan and Naveen Jindal. It has a 1,200-megawatt thermal power plant located in Odisha, which is operational and has in place multiyear power purchase agreements with state electricity boards. The company came into financial distress as it faced shortages of coal to fuel its plants.

The promoters made an offer for the company in November last year after two previous attempts to find a buyer through a bidding process initiated by bankers failed. The bankers used the promoter’s offer as a base to launch a ‘Swiss challenge’ and invited bids from third parties to match the offer in December. No bidders participated in the process.

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A Swiss Challenge is a method of bidding that uses an unsolicited offer as a base to attract better bids from third parties. The right to match the highest bid is typically reserved for the original offerer.

In a note circulated to investors on Friday, Fitch Ratings downplayed the impact of the coronavirus on thermal power generation companies in the Asia Pacific region.

“Fitch believes governments are unlikely to order a shutdown of power stations during the pandemic even under a full lockdown, as the supply of electricity is perceived to be an essential service” analysts Sunny Huang and Louis Pang remarked in the note.

Shyam Sunder Jindal is also the promoter of listed Jindal Poly Films.



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