CESC in deal with PFC to prepay debt

RPG Group company and power utility CESC Ltd, which has embarked on its second round of financial restructuring exercise, has roped in Power Finance Corporation (PFC) for a Rs 325 crore loan that would be used to prepay its earlier debts.

"We have entered into talks with few finance companies for loans at cheaper rates. These would be used to prepay principal components of our earlier debts resulting in a declining outgo on account of interest," explained Sumantra Banerjee, managing director, CESC Ltd.

"We would use these funds for prepaying both long term and working capital debt with cheaper ones as part of the second round of restructuring effort," he added.

The company has been negotiating for a 9.5 per cent rate of interest for the loan from PFC which is at a very advanced stage.

"CESC is likely to sign on the dotted line soon and is in the process of documenting the deal following which the fund will flow in," said sources close to the development.

Under the original scheme of repayment, prior to the debt recast was finalised, CESC was paying around Rs 490 crore per year as interest repayment and finance charges.