Millennium Post

ITPCL debt structuring suffers due to TN utility arrears

New Delhi: The debt restructuring efforts for IL&FS Tamil Nadu Power Company Limited (ITPCL) is being hindered due to overdue payments from the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO).

According to an IL&FA document, the restructuring efforts as well as the recovery to lenders of ITPCL is being hindered on account of the overdue payments from the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO).

ITPCL, which is implementing a 2,600 MW thermal power plant in Tamil Nadu has entered into power purchase agreements with the TANGEDCO and PTC India Limited (PTC) (collectively the PPAs).

An aggregate amount of approximately Rs 1,706 crore (inclusive of the late payment surcharge till November 30, 2019) is overdue from TANGEDCO and PTC.

The failure on part of TANGEDCO and PTC to release these amounts due and payable to ITPCL (in spite of repeated requests and numerous engagements by the IL&FS management) has caused severe cash flow and operational challenges and has been hindering the efforts of the lenders and the IL&FS Group to prepare and implement a feasible restructuring proposal for ITPCL.

For (ITPCL, an "Amber" entity, the new board is considering a debt restructuring proposal under the' Prudential Framework/or Resolution /Stressed Assets' issued by the Reserve Bank of India on June 7, 2019.

ITPCL has availed external fund based debt aggregating to approximately Rs 6,730 crores as well as fund based debt aggregating to approximately Rs 908 crores from other IL&FS Group entities.

ITPCL and its lenders have made significant progress in the restructuring efforts, after having had multiple rounds of meetings, pursuant to which the core committee of lenders have submitted a restructuring proposal that considers the total sustainable debt of ITPCL.

In terms of next steps, the techno economic viability report is expected to be circulated shortly, post which the consortium of lenders of ITPCL will engage credit rating agencies for evaluating the sustainable debt analysis, and the parties will jointly finalise a proposal for an RP-4 rating. Once the approval and the rating from the credit rating agencies is received, the parties will implement the restructuring proposal after seeking relevant approvals.

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