IL&FS Solar Power clears its entire debt of Rs 845 crore

• The parent company, IL&FS Group, had invited bids for IL&FS Solar Power in November 2018 but had failed to garner interest

• IL&FS said that the repayment of ISPL's debt is a key "intermediate" step in the resolution process

New Delhi: IL&FS Solar Power (ISPL), a wholly-owned subsidiary of IL&FS Energy Development Private Limited, has cleared its entire debt of around Rs 845 crore across all its creditors, including financial and operational debt, tax and statutory dues, without any preference to any creditor or class of creditors, the company said on Thursday. The parent company, IL&FS Group, has been trying to sell its assets for debt resolution and had invited bids for IL&FS Solar Power in November 2018 but had failed to garner interest. IL&FS said that the repayment of ISPL's debt is a key "intermediate" step in the resolution process.

IL&FS Solar Power raised secured, unsecured loans from EEPL for 100 MW solar project

IL&FS Solar Power had undertaken construction and financing of a 100 MW AC solar power project in Bellary district, Karnataka, for Embassy Energy Private Limited (EEPL) that was commissioned in February 2018. ISPL had raised secured and unsecured loans for this power project. EEPL, as the owner of the project, was servicing ISPL through an EMI structure under the terms of Deferred Payment Agreement (DPA).

EEPL, in exercise of its rights under DPA, has pre-paid the financial assistance extended by ISPL towards the project. The prepayment by EEPL has enabled ISPL to recover the amounts due to it under the DPA, which otherwise would have been payable to ISPL over the next 12 years with the last instalment falling due in February 2033, said ISPL. "This prepayment by EEPL has further enabled ISPL to repay its debt," the company said in a statement.

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It said that ISPL will continue to provide certain operational services to EEPL in respect of the project until its final resolution in accordance with the resolution framework approved by NCLAT through its order dated March 12, 2020.

The backdrop

The Chairman of the financially-troubled IL&FS, Uday Kotak, had prepared an ambitious plan to recover over 50 percent of its debt, amounting to Rs 47,000 crore, by March 2020. However, the nationwide lockdown imposed in the wake of the Covid-19 pandemic dealt a blow to the plan. The IL&FS Group had a debt of Rs 94,000 crore at the time it defaulted on several loan obligations in September 2018. This had triggered a fraud investigation.

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