Calcutta, Nov. 7: CESC today signed an agreement with its lenders to restructure its Rs 3,000-crore borrowings after one-and-a-half years of negotiation.
Consequent to the restructuring, the RPG group-controlled power utility would be saving Rs 50-60 crore in the next financial year, its managing director Sumantra Banerjee said.
“Our lenders have agreed to extend the tenure of loans by three years on an average. CESC will now be able to match the repayment of these loans with its cash flows,” he added.
The company’s lenders have also agreed to reduce interest rates. “The average cost of borrowing will fall to 13.5 per cent thanks to the restructuring,” CESC’s managing director said.
In return, the promoters had to pledge 16 per cent of CESC’s shares with the lenders. This is about 40 per cent of the RPG group’s acknowledged holding in the company. They have also infused Rs 15 crore through a preferential allotment of shares.
Some of its borrowings date back to the early nineties when interest rates were as high as 17-19 per cent. CESC’s Rs 3,000-crore debt includes around Rs 1,000 borrowed from multilateral agencies like International Finance Corporation (IFC), Washington, KfW — the German financial institution — and Asian Development Bank (ADB).
To improve its operational efficiency, CESC is cutting payroll cost and has managed a substantial reduction in transmission and distribution losses.
The CESC stock closed at Rs 119.50 on the National Stock Exchange today, marginally lower than Thursday. It had rallied to its year-high of Rs 128 recently.