A consortium of lenders has implemented the Strategic Debt Restructure process on Lanco Kondapalli Power Ltd, a subsidiary of Lanco Infratech.
Following the move, the lenders have a shareholding of 52.21 per cent due to conversion of debt into equity.
The gas-fired Lanco Kondapalli power project, which has installed capacity of 1466 MW, is unable to operate 1108 MW of capacity due to gas shortage and lack of power purchase agreement, has incurred losses for the past three years resulting in over dues to the lenders.
To address the overdues and to bring viability into operation, the Joint Lenders Forum of the debt-laden infrastructure company Lanco Infratech invoked the provisions as per the RBI guidelines for Strategic Debt Restructure.
Shareholding pattern On account of the implementation of SDR, the effective shareholding of Lanco Infratech in the subsidiary has been reduced from 58.91 per cent to 28.15 per cent and Lanco Kondapalli has ceased to be its subsidiary of the company. The shareholding of other minority shareholders before the SDR was 41.09 per cent and it has come down to 19.64 per cent.
In this changed situation, while the lenders stand to gain, having the power to divest stake in the company to a strategic partner, the shareholding of the promoter and promoter group has come down. The lenders now have a majority control of the company’s subsidiary.
Insolvency proceedings The infrastructure company is faced with insolvency proceedings in the National Company Law Tribunal. The Tribunal has appointed Savan Godiawala as insolvency professional to oversee the management of the company and find a way out of the current situation, including possibility of divesting stake at the holding level or at the subsidiaries.
During the company recent annual general meeting held in Hyderabad, the management outlined efforts to divest stake in some of the projects by finding a right suitor. And that efforts are likely to bear fruit as there has been interest in several of the company projects, including power, highways and solar.
This project joins several other infrastructure companies with similar SDR move by bankers converting debt into equity and later fuinding a suitable buyer to pare their exposure.