Daily Archives: June 18, 2019

This would be the third sale for Essel Infraprojects, which aims to monetize assets to pay off creditors.

Essel Infraprojects Ltd, a part of the Subhash Chandra-led debt-laden Essel Group, has agreed to sell about 310 megawatts (MW) of solar energy assets to the Adani Group at a valuation of Rs 1,800-2,000 crore, said two people aware the development.

This would be the third sale for Essel Infra, which aims to monetize assets to pay off creditors.

Of its total solar energy portfolio of 685MW that Essel Infra won under the National Solar Mission and state government auctions, about 310MW is currently operational. The projects for generating the remaining 375MW are under construction.

“Essel Infra has reached an agreement with the Adani Group to sell its operational portfolio at Rs 5-6 crore per megawatt. This will help Essel pay back the debt on these assets, while the remaining will be return on equity for the company,” said the one of the two people mentioned above.

The Essel Group has tried to sell the solar assets in the past year. Talks with renewable energy company Greenko had reached advanced stages in early 2018. This was followed by talks with private equity investor Actis in December last year. However, both deals failed to fructify. In February 2019, Essel Infra initiated talks with ACME Solar Holdings, another solar power developer, but this deal also fell through.

“The calling card for Essel Infra’s solar assets is that they have higher tariffs, an average of Rs 5.50 per kilowatt hour (kWh) and in some cases as high as Rs 8 per kWh. The operational portfolio has older assets that were won before the tariffs fell sharply,” said the other person mentioned above. This is much higher than the Rs 2.50-2.80 per megawatt current tariff for solar power.

A spokesperson for the Essel Group said it “does not comment on any speculations”, in response to emailed queries from Mint. “The stake sale process of the group’s infra assets is in an advanced stage. Any additional detail cannot be shared because of confidentiality agreements,” the spokesperson said.

Publicly-listed Adani Green Energy, which houses the Adani Group’s renewable energy interests, constructs, owns and operates solar and wind power plants. As of December 2018, it had an installed capacity of 1,958MW across 11 states.

The Adani Group did not respond to emailed queries till the time of going to press.

As of December 2018, Essel Infra had total debt of Rs 11,466 crore while the promoters owe about another Rs 13,000 crore to lenders.

After the Essel Group missed payments to lenders earlier this year, it reached an agreement with lenders to extend the payment deadline to 30 September, during which time it would sell a host of assets in its portfolio to raise cash and repay the lenders.

Mint has reported earlier that Essel Infra has completed the sale of three road assets to Caisse de dépôt et placement du Québec (CDPQ), Canada’s second-largest fund manager, for Rs 3,300-3,500 crore last month and raised another Rs 3,000 crore by selling two power transmission lines to Sekura Energy Ltd, a company owned by Edelweiss Infrastructure Yield Plus fund.

The debt on Essel Infra’s books will halve after these sales, said the second person mentioned above.

https://www.moneycontrol.com/news/business/companies/essel-infra-to-sell-solar-assets-worth-rs-2000-crore-to-adani-group-4109291.html

State-owned China Development Bank, with loans worth Rs 9,860 crore ($1.4 billion) was the biggest creditor to the indebted telecom company, according to a filing made by the company to stock exchange

Chinese lenders, including China Development Bank, Industrial and Commercial Bank of China and Exim Bank of China, have demanded at least $2.1 billion from Anil Ambani’s Reliance Communications, that slid into bankruptcy earlier this year.

State-owned China Development Bank, with loans worth Rs 9,860 crore ($1.4 billion) was the biggest creditor to the indebted telecom company, according to a filing made by the company to stock exchanges.

Exim Bank of China sought payment of Rs 3,360 billion, while Industrial and Commercial Bank of China claimed Rs 1,554 crore, according to the filing.

The country’s bankruptcy court is hearing lenders, and the former billionaire’s telecom firm as it attempts to find buyers for the company’s assets and pay debt. Anil Ambani’s older sibling Mukesh Ambani’s Reliance Jio Infocomm had earlier offered to purchase RCom’s assets in a Rs 17,300 crore deal, which would have helped partly pay off lenders. The deal fell through after encountering regulatory hurdles.

Mukesh Ambani had in March helped his younger brother avert the risk of being jailed by making an $80 million payment on his behalf to the local unit of Ericsson AB for past maintenance services.

Reliance Communications on Monday released list of financial creditors that are claiming Rs 57,382 crore under bankruptcy proceedings.

Investment bank VTB Capital of Russia has also featured in the list with a claim of Rs 511 crore while Standard Chartered Bank (London), Deutsche Bank (Hong Kong), DBS Bank and Emirates NBD Bank are among other foreign institutions in the financial creditors chart.

https://www.business-standard.com/article/companies/chinese-lenders-demand-at-least-2-1-billion-from-anil-ambani-s-rcom-119061800062_1.html

Jet Airways owes over Rs 8,000 crore to a consortium of 26 banks led by the State Bank of India.

Jet Airways shares locked in 10 percent lower circuit at Rs 61.50 on June 18 after a media report indicated that State Bank of India filed insolvency petition against the company to recover dues.

The stock lost 50 percent of its value in the last seven days. At 10:16 hours IST, there were pending sell orders of 403,240 shares, with no buyers available.

Country’s largest lender State Bank of India approached National Company Law Tribunal in Mumbai against cash-strapped Jet Airways on behalf of the consortium of lenders, reports CNBC-TV18 quoting unnamed sources.

The report said SBI has filed insolvency petition against the airline in Mumbai bench of NCLT and proposed Ashish Chhawchharia of Grant Thornton as Resolution Professional.

After a meeting of the 26 lenders on Monday, SBI said, “after due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received”.

The statement further said the move was necessitated as the prospective investor wants some SEBI exemptions for a possible deal which can be worked out better under the bankruptcy laws.

The decision of the lenders to seek bankruptcy process through the NCLT comes exactly two months after the airline stopped flying on April 17, after being on the fringe since last July.

The Etihad-Hinduja consortium had reportedly shown interest but not given a concrete proposal yet, forcing the lenders to take the NCLT plunge as they have asked for a large haircut from the lenders.

Mumbai bench of NCLT will hear the operational creditors plea on June 20.

Jet Airways owes over Rs 8,000 crore to a consortium of 26 banks led by the State Bank, which now run the airline, while it has a much larger debt pile by way of accumulated losses to the tune of Rs 13,000 crore and vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore.

The once largest private sector airline started over 25 years ago by airline-ticketing-agent-turned-entrepreneur Naresh Goyal stopped flying on April 17 after it ran out of cash and the unpaid lessors took away most of its 100-odd operational airplanes.

https://www.moneycontrol.com/news/business/markets/jet-airways-hits-lower-circuit-after-landing-in-bankruptcy-court-4109461.html

CFM International will deliver the first engine by 2020

IndiGo has ordered jet engines worth $20 billion from a joint venture of General Electric, US, and France’s Safran SA, the low-cost airline announced on Monday. With this, the biggest buyer of Airbus SE A320neo planes seems to be moving away from Pratt and Whitney engines, which have been experiencing glitches.

The order for 280 engines to power Airbus A320neo and A321neo aircraft will include service and maintenance, the airline’s statement said.

CFM International, the GE-Safran venture, will deliver the first engine by 2020. This was first reported by Business Standard in its May 30 edition.

“We are pleased to partner with CFM for our next batch of Airbus A320neo and A321neo aircraft,” said Riyaz Peermohamed, chief aircraft acquisition and financing officer, IndiGo

He added, “The CFM LEAP engine will allow IndiGo to maintain its strong focus on lowering operating costs and delivering fuel efficiency with high standards of reliability. This new partnership will allow IndiGo to continue to provide affordable fares to its customers.”

The order is a blow to Pratt, a division of United Technologies, which has grappled with delivery delays and groundings in India after spending $10 billion to develop its fuel-efficient geared turbofan for single-aisle jets.

The new deal strengthens CFM’s presence in India, the world’s fastest growing aviation market last year. The local affiliate of Singapore Airlines and state-run Air India are already using its turbines.

A move by IndiGo, Asia’s biggest budget carrier by market value, to CFM would be a key reputational negative for Pratt’s geared turbofan and could hurt future sales campaigns. Since induction in 2016, Pratt and Whitney engines have faced multiple issues, primarily because of design flaws that have grounded planes, delayed deliveries, and prompted hundreds of millions of dollars in compensation claims.

Operational problems stretched from long engine start up time delaying turnaround of aircraft, problems with the seal of the engine and durability issues with the turbine blades. The situation turned worse in March 2018 when Indian aviation regulator the Directorate General of Civil Aviation grounded 11 A320 Neo aircraft including eight of IndiGo.

The regulator had heightened scrutiny on the turbines leading to higher removal of engines, which caused a shortage of spare engines and forced planes to be grounded till October last year.

“Pratt’s GTF engine has been fantastic for operators in terms of fuel efficiency, reducing fuel burn by almost 16 per cent. But A320 Neo operators across the world feel that the stabilisation period for this engine has been far longer than initially promised. Since there is an option, airlines will naturally weigh that,” said an industry source.

https://www.business-standard.com/article/companies/indigo-moves-away-from-pratt-whitney-places-20-bn-order-for-cfm-engines-119061701167_1.html