Lanco completes sale of Udupi power plant to Adani

Mumbai: Lanco Infratech Ltd on Monday said it has completed the sale of its 1,200 MW coal-fired Udupi power plant in Karnataka to Ahmedabad-based Adani Power Ltd.
The company had announced the sale in August for `6,300 crore to cut its increasing debt. The sale could not be executed as company failed to get approval from all lenders of the project.
“There are 16 lenders. We have to get no-objection certificates from all the lenders as the shares are under pledge. Unless the lenders give consent, the pledged shares can’t be released,” said T. Adi Babu, chief operating officer of Lanco.
“This transaction will support Lanco in reducing its debt and infuse capital in other projects, including Lanco Amarkantak power,” the company said in a statement.
The Udupi project has long-term debt worth `4,275 crore and short-term debt of `2,147 crore. Both will now be knocked-off of Lanco’s balancesheet. The company has a consolidated net debt of `37,973.3 crore as on 31 December. Lanco’s proposal to restructure loans worth `7,700 crore was approved by lenders in December 2013. According to the condition laid down by lenders, Lanco needs to infuse additional funds through sale of assets.
The Udupi power project is the country’s first independent power project that is based on 100% imported coal with a captive jetty of 4 million tonnes a year and an external coal handling system in the new Mangalore Port Trust. The plant’s facility can be expanded as Udupi has already signed a pact with the Karnataka government for further expansion of the capacity by 1,320 MW.
Gurgaon-based Lanco has 3,450 MW assets operating in various states in the country and 4,636 MW is under construction at various stages. Some of these assets have coal blocks and 100% regulated tariff.
Lanco has laid out a plan whereby it will look at more such strategic sell-offs like Udupi to streamline its operations and strengthen the core of its business, the company statement said.
Shares of Lanco declined 4.34% to close at `5.29 on BSE; the benchmark Sensex fell by 1.03% to end 28,150.36 points.
Source: Mint; 20 April 2015

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