CG Power yesterday, post market hours, informed the completion of all the terms of Master Implementation Cum Compromise Settlement Agreement dated 20th Nov 2020, by Tube Investment with the lenders, in respect to Tube taking over CG Power.
Para (iv) of the said release states “Recognition of debt of Rs.150 crore, in the books of CG Power, against CG House property”. CG House is an iconic property at Prabhadevi, Central Mumbai, with 2 Basement, ground, with 12 upper floors, with typical floor area of 7,114 sq. feet, with total area of 80,424 sq. Feet. This is a Non I.T. Centrally Air Conditioned Building, having constructed by L&T in the year 2008, with parking provision of over 800 vehicles, with parking ratio of 1:15. Propery consultants estimates NPV of CG House at about Rs.550 crore. This propery is adjacent to Ritz Carlton Hotel, coming up at Prabhadevi, where Oberoi Realty, recently bought 50% stake for Rs. 1,040 crores (read MG item on this carried here yesterday).
Infact, this Rs.150 crore, needs to be paid by CG Power to the lenders in next 5 years. Infact rental cost of this property is estimated at Rs. 30 cr, annually (based on letting out by Century Textiles, 2 buildings away from CG House, that too in an I.T. Park, where renatals are 50% of CG House).
So with CG Power, now as 58% subsidiary of Tube Investment, may see write off of debt of about Rs. 2,000 crore, which may get disclosed in Q3 FY21 numbers, being an exceptional item. So, positive view on stock price of CG Power, over next 18 months, gets accelerated, with this seen as icing on the cake.