Haven’t been able to complete the document yet. Major highlights so far.
The Invit will have 5 TBCB projects. “Of the Sponsor TBCB Projects, we propose to acquire five projects initially with a total network of 11 power transmission lines of approximately 3,698.59 ckm and three substations having 6,630 MVA of aggregate transformation capacity, as of September 30, 2020, across five states in India (the “Initial Portfolio Assets”).”
These are:
- POWERGRID Vizag Transmission Limited (“PVTL”)
- POWERGRID Kala Amb Transmission Limited (“PKATL”)
- POWERGRID Parli Transmission Limited (“PPTL”)
- POWERGRID Warora Transmission Limited (“PWTL”)
- POWERGRID Jabalpur Transmission Limited (“PJTL”)
Essentially, money raised will be used to repay loans advanced by PGCIL to the tune of Rs. 5000 crores towards these projects. Plus the invit will hold 74% in these projects.
"Interest: The loan shall carry an interest rate of 14.5% (fourteen and a half per cent) per annum, which may be reset on each interest payment date occurring after the first interest payment date i.e. the last business day of each interest period.
Repayment: The relevant Initial Portfolio Asset shall repay the principal amount of the loan to the Trustee (in its capacity as the trustee to the Trust) or the Investment Manager through a single bullet payment upon expiry of the TSA. The relevant Initial Portfolio Asset shall pay the interest due on a quarterly basis on the last business day of each interest period, which dates may be reset on mutually agreeable terms.
All payments under the Facility Agreements shall be subordinate to any secured or unsecured loan obligations incurred by the relevant Initial Portfolio Asset from any bank, non-banking financial company or financial institution, which is neither an affiliate of the Trust or the Sponsor.
Premature repayment: The relevant Initial Portfolio Asset shall, with a prior notice to the Trustee, be entitled to prepay all or any portion of the outstanding principal amounts of such loan, without any prepayment penalty or premium.
Term: The loan agreement shall remain in force until all monies payable by the relevant Initial Portfolio Asset to the Trustee under the loan agreement are paid in full and all obligations of the Initial Portfolio Asset are discharged to the satisfaction of the Trustee."
In terms of future scope, they’re looking to acquire more such assets as they come online plus “Further, our Investment Manager may seek to generate non-transmission revenue from various avenues, including leasing of optical ground wire and transmission towers.”
Impressions so far: I’m not sure if I understood that 14% correctly (which would be AMAZING if it’s actually being advanced at 14%). The overall impact on PGCIL in terms of financials is limited (also considering these are TBCB and not regulated assets). These projects have revenues to the tune of 1300 crores each year and PAT of around 380 crores. But PGCIL get’s a huge chunk of money back will be significant (as % of market cap). (I’m guessing they’ll probably reinvest in other projects).