CFM Asset Reconstruction Co has acquired the debt of GMR Rajahmundry Energy from Edelweiss Asset Reconstruction Co. The transaction closed on June 30.
Edelweiss ARC had purchased GREL’s ₹458 crore debt from IDFC Bank in 2018, as part of a broader portfolio of accounts. Initially, investors expected an internal rate of return of 20% on the debt. However, it did not meet the expectations, leading to Edelweiss exiting.
Indian regulations allow an ARC to transfer assets only to another ARC.
A CFM spokesperson did not respond to a request for comment.
GMR had in 2019 restructured its debt, dividing ₹2,353 crore of liabilities into two segments: ₹1,412 crore of sustainable debt and ₹1,130 crore of unsustainable debt, both with different repayment structures.
The sustainable part of ₹1,412 crore included an equity infusion of ₹395 crore by GMR’s parent company to cover 20% of the principal and interest obligations for the first year. The remaining ₹1,130 crore was structured with a floating interest rate of 9% per annum, repayable over a 20-year period. This complex restructuring was done to improve GREL’s financial position.
