KSK Power Ventur PLC - Business Update
("KSK", the "Company" or the "Group")
KSK Mahanadi has now executed the Fuel Supply Agreements under the "SHAKTI" (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in
This undermines the historical efforts of the Group to achieve / conclude further strategic funding and equity collaboration at each of the asset levels as well as anticipated reduction of debt leverage at various asset holding companies of the Group, based upon fund realisations from such equity stake divestment at the project companies. Resultantly, the balance has tilted in favour of the project lenders for appropriate resolution plan approvals, at each of the project companies, impacting the existing sponsor's continuation alongside the new investors in resolving the stress as well as the business challenges and participation in the value creation ahead.
For instance, at KSK Mahanadi, where approx
At a stabilised 85% PLF and linkage coal supplies secured for entire capacity, the potential of substantial revenue and EBITDA for the 2400 MW of KSK Mahanadi project subsists making it attractive. However, the new regulations and resolution framework expose the equity of the Group to any decision of the Project lenders at KSK Mahanadi to reorganise their
Further, it is estimated that, while the
Therefore, the Group expects to have to engage actively with Private Equity and
New Business Strategy
These developments require a different approach to be pursued at the Group to address the challenges and to continue to seek the restoration of economic value for the Group and its shareholders. The Directors are focussed on convincing various Indian banks and institutions that have funded the Group's holding companies to continue supporting the group in these efforts to turnaround the various assets, failing which the revised framework could impair the continued ability of such holding companies.
This effort could result in shareholder dilution through the capitalisation of debt as a result of a business restructuring as well as include a change of management driven by the lenders at the respective operating projects. In the process of such reorganisation driven forward by the lenders, substantial risk of loss of equity value exists.
Given the various significant developments within the Indian environment, the Company's Board is being reorganised to address these new business challenges. This includes the stepping down of three of the existing Non-executive Directors and the appointment of new Non-executive Directors with experience and expertise in Indian government and banking matters as well as international investors, and additionally to assist with the pursuit of requisite collaborations as may be required.
In this regard, the Board wishes to express its thanks and appreciation to Mr. S.R. Iyer, Mr.
Therefore, a continued engagement with project stakeholders is envisaged to pursue all reasonable efforts to address the situation, with the ultimate objective to produce sustainable power generation on the best possible commercial terms. Majority of these are external issues and not directly within the Company's control to resolve.
Against this current difficult Indian policy environment, the Company continues to work tirelessly with the Government, the authorities at all levels and other project stakeholders seeking their support to address these issues in the best manner possible. However, actual achievement in these situations is contingent upon a number of factors, many of them outside the control of the Company.
Finally, this performance would not have been possible without the continued support of our shareholders, who have enabled us to pursue business opportunities against a background of challenging market conditions across the Indian power sector.
For further information, please contact:
Arden Partners plc
This information is provided by RNS
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