GMR Chhattisgarh Energy, a subsidiary of GMR Infrastructure, ran into trouble due to the absence of a long-term power purchase agreement (PPA) for the super critical power project. In 2017, lenders to the company under strategic debt restructuring (SDR) converted `3,000 crore from the total outstanding debt of `8,800 crore into equity, raising their stake to 52.4% in the company. The balance 47.6% remained with GMR.

GMR Group believes the implementation of “change in management plan” of resolution professional (RP) will lead to a significant de-leveraging for the GMR Group.

GMR Chhattisgarh had an outstanding debt of `5,926 crore as on March 31. “GMR Infrastructure’s profitability is expected to improve significantly considering GIL’s consolidated profit for FY19 was adversely impacted by `516 crore on account of Chhattisgarh Power Plant,” the company said. GMR Chhattisgarh reported a revenue of `814.7 crore in FY 19 as against `382 crore in FY18.

GMR Infrastructure said the successful resolution of two stressed assets — GMR Rajahmundry Energy’s resolution plan for 765-MW gas-based power plant with lenders to pay `2,353 crore debt on May 4, and now the sale of Chhattisgarh power plant — highlights “the group’s commitment towards its objective of deleveraging and de-risking the balance sheet.”

The corporate guarantees to the extent of `892 crore furnished by GMR Group companies, GMR Energy, GGAL and GMR Power Corporation, will also be released by the lenders, GMR Infrastructure said.

GMR Chhattisgarh will be the third project to be resolved outside the insolvency route in the power sector. Prayagraj thermal power project of Jaiprakash Associates was bought by Resurgent Power, a joint venture promoted by Tata Power and ICICI Bank. The other resolved project was SKS Power’s 4X300 MW Binjkote Power Plant.