HYDERABAD: A consortium of lenders on Tuesday decided to take control of Lanco InfratechBSE 0.79 % by converting a part of the cash-strapped company’s debt for a 60 percent equity stake, a person close to the matter said.
The corporate debt restructuring, involving about Rs 41,000 crore of debt across the group, is seen as one of the biggest such exercises in India.
The 29-member Joint Lenders’ Forum also agreed to enable OPG Power Ventures to acquire a 51 per cent stake in Lanco’s power business that will be demerged, the person said. Consultancy firm E&Y had come up with an enterprise valuation of around Rs 5,300 crore for this segment, he added.
A Lanco group spokesperson refused to confirm or deny the development. “The company is currently in parleys with the lenders for debt restructuring and is also exploring various options to rope in investors,” the spokesperson told ET.
OPG Power Ventures couldn’t be contacted for comment. A banker said the lenders’ forum has in principle approved the scheme. While the earlier proposal was to convert a majority of Lanco Infratech debt into equity-related instruments, the consortium has now decided to convert 61 percent of Lanco Infratech’s standalone debt into debt instruments and swap 39 percent with instruments convertible into equity, the person told ET.
On conversion, expected to happen by September, the lenders will end up gaining a 60 percent stake in Lanco Infratech. With that, the holding of the core promoters will plunge to 24 percent from around 70 percent now, while the public will have the balance 16 per cent, he said. As per the revised reorganisation scheme approved by the lenders, the business of the listed Lanco Infratech will be split into three.
Under the plan for the power business, the OPG group was asked to immediately infuse Rs 150 crore as equity with an assurance to bring in or arrange another Rs 1,500 crore of equity required for completing its ongoing power projects.
The lenders have had discussions with OPG Power Ventures Managing Director Arvind Gupta on the deal, the person added. The power holding company will own Amarkantak Power, Babandh Power and Vidarbha Thermal Power with 1,320-megawatt capacity each, the Anpara Power project of 1,200 MW and the 600 MW Amarkantak Power plant.
