Resurgent Power acquires South East UP Power Transmission Company via insolvency process

As per the resolution plan, the transaction entailed payment for one-time settlement of outstanding debt and purchase of equity shares for a consideration of ₹3,251 crore and payout of existing cash balance of SEUPPTCL

September 17, 2022 09:01 pm | Updated 10:14 pm IST - New Delh

Representational image only.

Representational image only. | Photo Credit: Reuters

Resurgent Power Ventures on Saturday said that it has completed the acquisition of South East UP Power Transmission Company through an insolvency process.

As per the resolution plan, the transaction entailed payment for one-time settlement of outstanding debt and purchase of equity shares for a consideration of ₹3,251 crore and payout of existing cash balance of SEUPPTCL.

The transaction has been funded through a mix of shareholder funds brought in by Resurgent Power and loans raised from State Bank of India.

"Pursuant to the Letter of Intent (LOI) issued by the resolution professional of South East UP Power Transmission Company Limited (SEUPPTCL) and approval of the resolution plan by National Company Law Tribunal, Allahabad (NCLT) vide order dated June 15, 2022, Resurgent Power Ventures Pvt. Ltd. (Resurgent Power) has completed the acquisition of SEUPPTCL and has settled the debt of all existing creditors as per the terms of the resolution plan," a company statement said.

The transaction was part of a stressed asset resolution process run by the resolution professional under the supervision of its Committee of Creditors through a competitive bidding process under the Insolvency and Bankruptcy Code, 2016.  

SEUPPTCL was incorporated as a special purpose vehicle formed by UP Power Transmission Company Limited (UPPTCL) on September 11, 2009 to implement and operate the specified intra-state transmission system for 35 years under the public-private partnership model on Build-Own-Operate-Maintain & Transfer (BOOT) basis.

Pursuant to implementation of the resolution plan, SEUPPTCL has become a wholly-owned subsidiary of Resurgent Power.

SEUPPTCL has around 1,500 kilometres of transmission line (765 kV and 400 kV) and 5 sub-stations. About 900 kilometres of transmission link under the project is still to be completed.

Once the transmission project is completed, the total enterprise value will be about ₹6,500 crore.  Resurgent Power -- a joint venture based out of Singapore-- is co-sponsored by Tata Power and ICICI Venture and it has other global reputed institutions as investors.

It was set up to acquire stressed assets in the Indian power sector. Tata Power International Pte. Ltd. (TPIPL), a wholly-owned subsidiary of Tata Power, owns 26% stake in Resurgent Power. ICICI Bank Ltd. (ICICI Bank) owns 10% stake in Resurgent Power and the balance 64% is owned by the other global investors.

Resurgent Power owns 75.01% stake in Prayagraj Power Generation Company Limited, which owns and operates a 1,980 MW supercritical power plant in Uttar Pradesh.

Praveer Sinha, CEO & MD, Tata Power, said: "In line with our aspiration to expand our transmission business, Tata Power has partnered with ICICI and other global investors in Resurgent Power, that had bid for acquiring SEUPPTCL under Corporate Insolvency Resolution Process.

"We are delighted to have completed the acquisition, allowing all creditors to maximise the recovery from this project. This asset fits our overall strategy to maximise shareholder value through growth and sound investments. After successful turnaround of Prayagraj Power and acquisition of NRSS XXXVI, this asset will add further value to and diversify the Resurgent Power portfolio."

In a separate statement on the acquisition, state-owned Power Finance Corporation (PFC) said that it has successfully resolved the country's largest stressed asset in the power transmission sector of South East UP Power Transmission Company Limited.

PFC was the lead financial institution for the project, with REC and Bank of India as co-lenders in the consortium.

This is a landmark resolution through the Corporate Insolvency Resolution Process (CIRP) under the IBC (2016), which has resulted in lenders recovering in excess of 100% of the principal amount, it stated.

The project was originally allocated by Uttar Pradesh Power Transmission Company Limited on BOOT basis to Isolux Corsan Concessions SA of Spain in 2011, PFC said, adding that the project has now been handed over to Resurgent Power Ventures after receipt of the upfront payment on September 16, 2022.

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