“The loan will be ring fenced by revenues from 12 special purpose vehicles (SPVs) of the company through a restricted group structure. These SPVs have operational solar power projects with majority power purchase agreements (PPAs) with central counterparties like SECI (Solar Energy Corp of India),” said a person aware of the details. The refinancing is for 450 MW of operational solar projects of ACME.
A restricted group (RG) structure in a loan agreement defines which subsidiaries or SPVs of a company will comply with the covenants and guarantees for the loan. The structure allows the lending company to identify which entities and cash flows will service the debt. If any of the entities fail to meet their part of the payments, the SPVs in the group can step in, thus giving the lender comfort of repayment.
Vedanta Ltd is set to raise approximately ₹3,000 crore through a domestic bond issuance early next week to refinance upcoming obligations and bolster liquidity. The three-year and five-year non-convertible debentures are expected to offer coupons around 8.75% and 9% respectively.
The loan has been priced between 8% and 8.50%. The funds will be used to repay dollar bond holders as notes issued by ACME subsidiary India Cleantech Energy mature later this year. In August 2021, Cleantech had issued $334 million of bonds at a coupon rate of 4.7%. The proceeds were then used by Cleantech to subscribe to rupee denominated non-convertible debentures (NCDs) issued by 12 SPVs in India. The dollar bonds are currently trading at a yield to maturity of 6.24%.
