Tata Steel Sells EU Long Prod­ucts Biz to Grey­bull

Co’s 18,000-crore loans may be re­fi­nanced un­der 5/25 scheme

The Economic Times - - Front Page -

Shilpy Sinha & Saloni Shukla

Mum­bai: Bankers are likely to re­fi­nance .₹ 18,000 crore worth of loans of Es­sar Power in the largest such ex­er­cise this cal­en­dar year. Es­sar’s loans, borne prin­ci­pally by its sub­sidiaries, will be re­fi­nanced un­der the 5/25 scheme. This ex­tends loan re­pay­ment for in­fra­struc­ture com­pa­nies by up to 25 years, which can be re­fi­nanced ev­ery five years. Man­ag­ing Debt Loans re­cast for a few Es­sar Power’s project sub­sidiaries ca­pac­ity Tata Steel has sold its long prod­ucts busi­ness as­sets in Europe for an undis­closed ‘nom­i­nal’ amount to in­vest­ment firm Grey­bull Cap­i­tal, re­ports Our Bu­reau.

“The com­pany had sought eas­ier terms of re­pay­ment for some of its power plants so it matches the life­cy­cle of the project. We have given a go-ahead to that un­der the 5:25 re­fi­nanc­ing scheme,” a banker said on con­di­tion of anonymity. “The com­pany re­cently paid off some debt on the books of the hold­ing com­pany that gives us con­fi­dence that loans are secure.”

This is the big­gest re­fi­nanc­ing so far this year and should pro­vide a breather to the power firm which de­faulted on bond re­pay­ments to Life In­sur­ance Cor­po­ra­tion of In­dia (LIC) last year.

Power firms across the coun­try sad­dled with high debt have strug­gled to re­pay loans amidst reg­u­la­tory trou­bles and lack of fuel. Es­sar Power missed in­ter­est pay­ments on 11-year bonds it sold in 2013 to raise .₹ 1,000 crore from LIC. It has not paid in­ter­est on the deben­tures in the past six months.

In or­der to ease the pres­sure on such firms, the Re­serve Bank of In­dia ad­vised flex­i­ble re­fi­nanc­ing of long-term in­fra­struc­ture loans. The ten­ure is ex­tended to 25 years and the re­pay­ment starts af­ter five years with the op­tion to re­fi­nance it with any bank. Debt-laden com­pa­nies in­clud­ing Jaypee In­frat­ech, Adani Power and Ut­tam Galva Metallics have availed of this scheme and rat­ing com­pany Crisil ex­pects .₹ 80,000 crore more of in­fra­struc­ture loans to be re­struc­tured soon. “Es­sar Power has not done any flex­i­ble struc­tur­ing of debt in its books,” the com­pany said in an email re­sponse. “Some of its sub­sidiaries which have el­i­gi­ble projects have got the ap­proval of their lenders for flex­i­ble struc­tur­ing of their debt as per RBI guide­lines, as has been done by the lenders to other cor­po­rates, which have as­sets in in­fra and core sec­tor.” The com­pany and its sub­sidiaries had bor­rowed the money to set up elec­tric­ity gen­er­a­tion projects. State Bank of In­dia leads a group of 16 banks that lent the money to the Es­sar Power sub­sidiaries, the banks said.

Bank of­fi­cials say Es­sar is ex­pected to ben­e­fit from a drop in prices of coal, which is used to fire some of its power plants. A fall in lo­cal in­ter­est rates could also help lower fund­ing costs. The fact that the firm re­paid some of its other loans some time back con­vinced bankers that it needs ex­tra sup­port.

Bank of­fi­cials say Es­sar is ex­pected to ben­e­fit from a drop in prices of coal, which is used to fire some of its power plants

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