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Long Term Loan - Private Sector Transmission and Distribution

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Long Term Loan - Private Sector Transmission and Distribution

 

Extent of funding

 

Sole lending

REC’s sole lending exposure limit for Inter-State and Intra-State Transmission projects in private sector will be limited as per the below table:

Amount in Rs. Crore

 

Integrated Rating (IR)	ISTS	Intra State
IR 1 and IR 2	2000	1500
IR 3 and IR 4	1500	1000
IR 5	1000	750

In sole lending, REC may take full exposure in project debt subjected to Debt: Equity norms.

However, the overall exposure at group or promoter and borrower level will be limited as per prudential norms of the RBI and the norms approved by the REC Board from time to time.

 

Consortium lending

Maximum 50% of project cost or corresponding sole lending limit, whichever is higher are per integrated rating of the project.

 

Debt- Equity contribution

D:E ratio may range from 80:20 to 65:35, depending on the Integrated Rating of the Project.

 

Upfront Promoter Contribution

The upfront equity requirement for a Project may range from 20% to 45% of Project Equity, depending on the Integrated Rating of the Project.

 

Moratorium Period

The moratorium period for principal repayment may be up to twelve (12) months from the Commercial Operation Date (COD).

 

Repayment Period

The repayment period above moratorium period will be generally 15 years to 20 years.

However, moratorium and repayment period should not exceed 85% of the economic life of the project.

 

Security Package:

Standard Security Package:

• Mortgage of all immovable properties
• Hypothecation of movable properties, present and future book debt, bills etc
• First charge by way of assignment or creation of security interest including all rights, title, interest, benefits, claims and demands of the Borrower in Project Documents, Contracts, Clearances, Letters of Credit, Insurance Proceeds etc.
• Pledge of shares (Minimum 51% of each instrument of promoter contribution)

 

Collateral Security:

Additional security/collateral would be required according to risk perception. Following additional measures may be taken as per the Integrated Rating:

• Corporate Guarantee of either parent company/holding company/ associate/ affiliate.
• Charge on assets or revenues of group/other companies which are not financed by any other Lenders
• Pledge of shares of promoters
• Any other guarantee acceptable by the corporation

 

Fee Structure:

Description	Fees
Transaction Fees (TF) which includes processing fee, upfront fee, lead fee, syndication/underwritten fee	Particulars		% Of REC’s Sanction amount
	a. Under Construction Projects - REC is neither Lead nor Sole FI  c. Short Term Loans to Private sector		0.40%
	b. All Types of Funding to Commissioned Projects (Including Lead, Sole FI cases)
	c. Short Term Loans to Private sector
	Under Construction projects - REC is Sole FI		0.60%
	Under Construction projects - REC is lead FI		0.75%
	Total Minimum Fee		Rs.50 Lakhs
	Timeline for Payment of Fees
	Tranche	Amount	When Payable
	Tranche 1 (T1)	10% of TF (Transaction fees) with floor of Rs. 5 Lakhs & Cap of Rs.25 Lakhs	Before start of Detailed appraisal
	Tranche 2 (T2)	10% of TF (Transaction fees)	Before Issue of Sanction Letter
	Tranche 3 (T3)	Remaining Fees: TF – (T1 + T2)	Before Documentation
Security Trustee Fee	The policy for security trustee fee to be framed as per the REC policy from time to time.
Prepayment Charges and Policy	Applicable as per Section 6.9 – “Prepayment Norms”