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A 27-bank consortium, led by IDBI bank, has asked loss-making Lanco Infratech to sell more assets or raise capital through the qualified institutional placement (QIP) route to salvage its finances.
Recently, in the largest deal yet in the thermal power sector, Lanco Infratech had sold its 1,200-megawatt (MW) Udupi power plant to debt-laden Adani Power, part of the Adani Group, for R6,000 crore.
With this deal, Lanco’s cash balance went up R2,000 crore and R4,000 crore of its debt paid.
On March 31, Lanco Infratech had a debt of R34,877 crore, according to Bloomberg data. “We have asked them to bring in more money through asset sales, or else go for a QIP,” one of the bankers told FE after a meeting, called to take stock of the company’s performance, on Monday. The company can raise around R20,000 crore through the sale of its power plants, including its Kondapalli, Vidarbha, and Amarkantak projects.
Lanco has reported losses in the past three years due to problems across businesses; power plants are operating at low utilisation levels due to unfavourable sale contracts and fuel issues; the coal business is reporting losses partly because coal prices have come off globally. “Almost half of the company’s debt relates to projects which are under construction and unlikely to be operational for another two-three years,” an HSBC report said.
“Worse, the company has long outstanding dues from various discoms, aggregating to R2,800 crore (most of which is in dispute). The company has already restructured part of its loan at the parent level (around R3,000 crore) and the risk of significant equity dilution remains high,” the report added.