16 January 2020: A Deutsche Bank-led consortium’s efforts to buy out the debt of a power plant operator in eastern India have advanced, after no rival bidder emerged.
The struggling utility is Jindal India Thermal Power Ltd., one of a string of power plants being put up for sale by banks stuck with their defaulting debt.
The sector has been hit hard by oversupply in recent years, a consequence of a costly push to bridge India’s once chronic power deficit and expand reach to under-supplied rural areas. Power generators form a significant chunk of India’s $130 billion bad loan pile.
The consortium offered 24 billion rupees ($339 million) in cash to settle the company’s 76 billion rupee debt including interest due as of end March, which is currently being restructured, said the people, asking not to be identified citing confidentiality. The unsolicited offer was opened up to competing bids in an auction but no rival emerged by the deadline last week, the people said.
Success for the Deutsche Bank group deal could help preserve the 33.98% equity stake that the BC Jindal Group held as of March 31, 2019.
BC Jindal Group company shares jumped. Jindal Photo Ltd. rose as much 12.2%, the most in seven months. Jindal Poly Films Ltd. shares were up as much as 20.3%, the most in over six years.
The offer would effectively mean that creditors, led by Punjab National Bank, would recover a fraction of their outstanding debt holdings, the people said. Typically, if lenders do not agree with a debt-recast plan, they have the option of taking the company to bankruptcy.
A spokesman for Deutsche Bank declined to comment and a representative for Punjab National Bank didn’t immediately respond to an email seeking comment.