Lanco to Kick Off $1 Billion Power Assets Sale in Six Months

  • Company plans to repay all standalone debt with proceeds
  • To look for buyers as projects get completed: official

Indian power producer Lanco Infratech Ltd. expects to start the process to sell its assets in six months to raise an estimated 70 billion rupees ($1 billion) to repay debt.

“For now we are focused on completing the projects, because that will bring us value when we sell them,” T. Adi Babu, Lanco’s chief operating officer for finance, said in a phone interview. “As the projects get completed, we’ll look for buyers.”

The company, based in Gurgaon near New Delhi, has 3,460 megawatts of installed capacity. It is building three coal-based power plants of 1,320 megawatts each. One of these, the Amarkantak 3 & 4 plant in the central Indian state of Chhattisgarh is 78 percent complete and is expected to be commissioned in six months, Babu said. All three plants would be operational by December 2018. Apart from these, Lanco is also building two hydro-electric plants with a combined capacity of 576 megawatts, which are also for sale.

The transactions will help pay off almost all the debt on the parent company’s books, Babu said. The company is among several Indian power producers who took on large loans to build generation plants but foundered as slow approvals and lack of long-term purchase contracts delayed construction. It now faces pressure from lenders to repay.

Lanco had standalone debt of 67.7 billion rupees as of March 31, according to data compiled by Bloomberg. Group debt, which includes project debt, was 423.3 billion rupees. Debt taken to execute the projects will remain with the subsidiaries and will be acquired by the buyer, Babu said. The company has reported losses in the past five straight fiscal years.

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