29th May 2018 18:21
LONDON (Alliance News) - KSK Power Ventur PLC said Tuesday its new business strategy is being put on hold "until further clarity" is achieved on a number of its developments.
The Indian-focused power project company said the "current external environment" in the power sector in India is causing a "contagion effect" of "stress" where other power plant assets in the company have also "started experiencing difficulties requiring appropriate resolution plans".
In a release to the National Stock Exchange of India, KSK's subsidiary, KSK Energy Ventures Ltd, said a lender consortium at its KSK Mahanadi Power Company Ltd - which produced over 80% of the company's total capacity over the last 10 years - has issued notices of defaults with respect to credit facilities.
KSK said the lender process of inviting interest and bids from various investors would have an "adverse impact" on KSK Energy Ventures.
The shareholding at KSK Mahanadi "has been pledged with lenders" and, according to KSK, the "lenders" action in this regard would seriously jeopardize its value".
KSK said the continuing "uncertainty" about the new regulatory framework for debt resolution in India is another reason for the suspension of activities.
At the beginning of April, the Reserve Bank of India revised a framework for the resolution of distressing assets, including the possibility of sale of debt exposure by banks to other investors, or restructuring.
KSK said the plan undermines its efforts to secure further strategic funding at each asset level as well as reducing debt leverage in the various asset holding companies within the group, based on fund realisations from equity stake divestments in the subsidiaries.
As a result, KSK Power Ventur said it would adopt a new business strategy, to convince Indian banks and financial institutions to continue supporting the group, during which it can turnaround the various assets.
In addition, the group has also reorganised its board, with three non-executive directors stepping down, to be replaced by those with more political and banking experience.
Shares in KSK were untraded Tuesday but were last quoted at 9.00 pence each.