FIs for DPC debt restructuring

Indian banks and financial institutions which had lent around Rs 6,500 crore to bankrupt Enron Corp’s $2.9 billion Indian power plant (...

Indian banks and financial institutions which had lent around Rs 6,500 crore to bankrupt Enron Corp’s $2.9 billion Indian power plant (Dabhol Power Company) have proposed a restructuring of the debt to put the project back on the rails.

“The message we gave them is, according to us, the only way to save this project is for lenders to restructure it. All stakeholders will have to share the pain equitably,” an official of an Indian institution, who declined to be identified, said after two days of talks with foreign lenders in Singapore.

It is learnt that Indian lenders have suggested “financial restructuring by way of reduction in interest rate, elongation of the loan repayment schedule and a major cut by equity and other stake holders”. Indian lenders have an exposure of nearly Rs 6,500 crore while the foreign lenders have loans totalling over $500 million. Though DPC has defaulted payment of interest and principal to the lenders, the loan is yet to be classified as a non-performing asset (NPA) by Indian institutions.

Story continues below this ad

“We did not talk about any particular restructuring. We are in the process of appointing Rothschild as the financial advisor and we will be guided by what they say, because ultimately at the end of the day, we want a viable project,” the official said.

“The ABN Amro letter for exiting from the project, GE and Bechtel’s study proposal, NTPC’s role in the restart and update on the legal issues” were among the issues discussed at the two-day meeting of officials from US-based Overseas Private Investment Corporation, Bank of America, Citibank NA and ABN Amro Bank, IDBI, ICICI Bank and SBI which concluded on Wednesday.

The foreign lenders said they will discuss the idea internally and take a decision, the official added. Nearly 30 FIs lent $1.9 billion to build the plant and an adjacent terminal to import LNG.