RPower in talks with investors to pare external debt by 79% to ₹300 cr
Investors will either take over the debt for an equity or refinance the same at a lower rate
Continuing its efforts to reduce debt, Anil Dhirubhai Ambani Group Reliance Power has initiated talks with a clutch of international investors to reduce its external debt by 79 per cent to ₹300 crore, from ₹1,400 crore.
The company is closely engaged with lenders and potential international investors who will either take over the debt for an equity or refinance the debt at a lower rate, sources said.
The decision of the promoter company Reliance Infrastructure to strengthen Reliance Power balance sheet by subscribing to its equity on a preferential basis has boosted international investors’ confidence and they are willing to pump in money, they added.
The company is also looking to monetise its wind asset to pare external debt by ₹200 crore. The company has a 45- MW wind power project at Sangli in Maharashtra. This will bring down interest cost by ₹280 crore per annum.
The company has been on a debt reduction drive for the last few months. Its debt has reduced by 15 per cent to ₹20,625 crore in the financial year ended March, against ₹24,214 crore in the previous year.
RPower has set a target to cut the consolidated debt by ₹3,200 crore in this fiscal and reduce its debt-equity ratio to 1.80:1. Its debt-to-equity ratio improved to 2.08:1 in FY21, against 2.41:1 in FY20.
The company raised ₹1,325 crore by issuing preferential shares and warrants to its parent, Reliance Infrastructure. Post conversion, combined stake of Reliance Infrastructure and other promoters will rise from nine per cent to about 38 per cent. It expects the overall interest outgo to reduce by ₹3,000 crore by repayment of debt this fiscal, the sources added.
Though the interest outgo of the company in the March quarter was down at ₹620 crore, against ₹759 crore recorded last year, it is on the higher side and the debt reduction drive is in the right direction, said an analyst.
RPower has operating portfolio of 5,945 MW based on coal, gas, hydro and renewable energy.