In the last leg of its high-cost debt retirement programme, the state-owned National Thermal Power Corporation (NTPC) is set for a private placement of Rs 300 crore in the middle of July. The amount raised will be used to retire high-cost government debt of Rs 512 crore from the company's books.
The issue, to be raised on a book-building basis, will carry a coupon rate of 8.5-8.75 per cent, and the company has reserved the right to retain oversubscription of up to Rs 200 crore.
The company had completed the task of recasting its debt profile through prepayment of high-cost domestic and foreign currency loans over the past year, officials said.
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Earlier, National Thermal Power Corporation had raised Rs 1,500 crore from state-owned Life Insurance Corporation (LIC), through private placement of bonds, for prepaying government loans.
The exercise entailed a saving of Rs 428 crore on interest outgo for the company, officials said.
The taxable bonds issued to LIC carried a coupon rate of 9.55 per cent, with a maturity of 15 years.
The amount raised was used to repay government loans of similar residual maturity, carrying interest rates of 14-17 per cent.
National Thermal Power Corporation has been working on revamping its debt profile in view of the softening interest rates in the last couple of years.
The company has already undertaken prepayment of foreign currency loans to reduce the rate of interest on its debt. In 2001-02, NTPC prepaid Rs 600 crore towards interest payments, resulting in a saving of Rs 8.42 crore.
The corporation had, till date, prepaid 55.34 billion yen, 27.60 million euro and $120 million, resulting in a saving of Rs 163.22 crore, officials said.
NTPC has also restructured loans sourced from France and Belgium, which carried interest rates of 9.20 per cent per annum and 10.40 per cent per annum, respectively.
Following discussions with lenders, and approval from the Centre, the rates of interest on both the loans were changed from fixed to floating basis and linked to Euribor plus 75 basis points per annum, which translated to a rate of around 4 per cent per annum, officials said.
Savings to the tune of Rs 23.80 crore from the French loan, and Rs 3.16 crore from the Belgian loan were expected for the remaining period, the officials added.