Troubled Infrastructure Leasing and Financial Services (IL&FS) on Thursday concluded the sale of its seven wind energy assets to Japan's Orix Corporation, marking the first such resolution for the group since it was taken over by a government-appointed board. The deal will see the group level debt reduce by over Rs 4,300 crore.
Orix Corporation, which already holds 49 percent stake in these seven wind energy SPVs, will buy the remaining 51 percent stake from IL&FS to take 100 percent control of the SPVs at an enterprise value of Rs 4,900 crore.
These seven wind energy assets include Lalpur Wind Energy Private Limited, Etesian Urja Limited, Khandke Wind Energy Private Limited, Retadi Wind Power Limited, Wind Urja India Private Limited, Tadas Wind Energy Private Limited and Kaze Energy Limited, and were held under IL&FS Wind Energy Limited, a subsidiary of IL&FS Group.
"This deal will resolve a debt of over Rs 4,300 crore. Rs 3,500 crore of debt will be continued with SPVs under new ownership of Orix Corporation. IL&FS Group companies have received over Rs 800 crore of cash which will be put in an escrow account as per court orders," Ashwini Kumar, head of energy vertical at IL&FS, told CNBC-TV18.
Kumar added that IL&FS Group has received Rs 592.87 crore for its equity stake and Rs 216 crore for its debt in these seven SPVs.
All seven SPVs were in the "green" category, Kumar said.
The new board at IL&FS, led by Uday Kotak, has classified group companies into three categories of 'green', 'amber', and 'red', based on their financial health and ability to service debt. Companies with no cash and poor financial health which are completely unable to service dues were categorised as 'red', while those with enough to pay secured but not unsecured creditors were categorised as 'amber'. Those companies which could fully meet debt obligations to both secured and unsecured creditors were categorised as 'green'.
Under 'green', the debt was worth Rs 10,472 crore, while under 'amber', it was Rs 16,372 crore, and under 'red' Rs 61,375 crore.
The key lenders to these seven wind energy SPVs are Power Finance Corp, Bank of Baroda and India Infradebt (ICICI Bank fund). PFC has largest exposure at Rs 2,389 crore, followed by Bank of Baroda at Rs 1,035 crore and India Infradebt at Rs 112 crore.
"IL&FS Energy will still have solar, gas and coal assets remaining after the sale of the wind energy assets. Solar and gas assets of IL&FS Energy are also green entities which are fully servicing debt. Coal asset is undergoing restructuring... and we are in active discussions with our lenders on the restructuring of coal asset," Ashwini Kumar told CNBC-TV18.
The IL&FS Energy vertical houses over Rs 14,000 crore of the total group debt of over Rs 90,000 crore.
"Of the Rs 14,000 crore debt, over Rs 4,000 crore will be resolved via this deal with Orix, another Rs 8,000 crore under ITPCL which is being restructured and the remaining is much smaller loans in various other entities," Kumar added.