RattanIndia’s resolution – a relief for SBI, HDFC Bank, IndusInd

State Bank of India(SBI), HDFC Bank, IndusInd Bank, other consortium of lenders to bankruptcy court referred RattanIndia Power have received a relief following the resolution process.

This is one of the biggest debt resolution deals outside the Insolvency and Bankruptcy Code.

RattanIndia Power has entered into an agreement with its consortium of lenders led by PFC and SBI under which the existing principal debt of Rs 6,574 crore will be taken over by new investors, including Goldman Sachs and Varde Partners, for Rs 4,050 crore.

This is the first successful scheme to have been closed under the RBI’s Prudential Framework for resolution of stressed assets issue in June this year and the largest in terms of size outside the NCLT framework without any change in the existing management.

The debt resolution comes in the backdrop of significant sectoral challenges that the Indian power sector has been undergoing in terms of dealing with stressed and non-performing assets.

The process to find new investors was executed through a global Swiss challenge auction.

The first-of-its-kind transaction, in which foreign investors have replaced Indian lenders through a process of resolution outside the NCLT framework, has opened new doors for fresh capital to flow into the distressed Indian power sector.
RattanIndia Power currently owns two coal-based power plants in Maharashtra, with an aggregate capacity of 2.700 MW comprising 1,350 MW each at Amravati and Nashik.

For existing banks which have lent to Rattan Power like SBI, HDFC Bank & Indusind Bank this is a welcome relief as this will help them recover there non performing assets and improve there asset quality levels going ahead.

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