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BPL Power to demat equity for Ramagundam project

C. Shivkumar

V.K.Varadarajan

BANGALORE, Dec. 14

BPL Power has moved for dematerialisation of its equity to conform to some of the covenants laid down by the debt financiers of the 520-MW Ramagundam power project.

BPL is the first independent power producer in the country to go in for dematerialisation of its equity. According to company sources, the current dematerialised equity would be in the region of 275 million shares, equivalent to Rs 275 crore.

BPL Power is now expected to sign the term loan and guarantee covenants with domestic financial institutions over the course of the week. Another loan arrangement is to be signed with the Japan Bank for International Co-operation (JBIC), the successor in stitution to Japan Export Import Bank and the Overseas Economic Cooperation Fund. The $280-million involved would be mostly for the equipment financing package.

The sources said the dematerialised stake would be held by the promoters themselves though pledged to the FIs as security for the term loan financing.

The listing of the project's equity was not likely immediately, at least during the currency of the loan finance, as it would mean providing an exit option for one of the equity holders. However, as per the current FI guidelines, promoters are expected t o lock in at least 51 per cent of their equity during the debt service payment period. But once this is completed, the option for listing was open to the promoter group, the sources said.

The current equity holding by the promoter group is to the extent of 37 per cent by the promoters directly and through some of the group companies. Another 26 per cent is to be held by Mauritius-based Welleslley Investments, in which BPL is the major equ ity holder. While another 26 per cent would be held by engineering procurement and construction (EPC) contractors, Marubeni of Japan, the remaining 11 per cent would be held by the operation and maintenance contractor, Power Development Corporation, Japa n.

The total cost of the project, estimated at Rs 2,385 crore based on a Rs 35.5 per dollar exchange rate, is expected to be financed through a 70:30 debt equity ratio. Accordingly, the project debt requirement is estimated to be about Rs 1,669 crore.

The financial closure of the power project has been facilitated after the Andhra Pradesh Government agreed to activate the financial security package as demanded by ICICI. As per the State Government's condition, the security package is to be activated 3 0 days before the commercial date of operations of the project.

The entire debt component, both rupee and foreign currency, is expected to be on a floating rate basis so as to allow the project to minimise its debt service outflows.