JSW Energy led by Sajjan Jindal will acquire a 1,000 megawatt (MW) power plant from his younger brother Naveen-led Jindal Steel and Power for Rs 6,500 crore. There had been speculation last week that the deal may have run into hurdles after a planned press conference was cancelled.
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JSW Energy will also pay Rs 500 crore to JSPL as an interest-bearing advance, the companies said.
Everbest Steel and Mining Holdings Limited (ESMH), a special goal acquisition entity, has been created where the business undertaking of the JSPL plant will be transferred and JSW Energy will buy entire shareholding of ESMH, thereby enhancing its power generating capacity to 5,531 MW.
JSW Energy expects the acquisition to diversify its presence in coal-rich eastern India.
“The adverse operating environment within the power sector in the country is driving distress sales in the sector, and JSW Energy’s robust financial health coupled with a strong balance sheet is providing the company an opportunity to acquire quality power assets at reasonable valuations”.
The deal follows JSW Energy’s acquisition of 1,391MW of hydro power plants from Jaiprakash Power Venture in September 2015.
The Naveen Jindal-led firm had posted a net loss of Rs 519 crore in the year-ago period.
JSPL’s consolidated net debt ballooned to Rs 46,000 crore-or nearly seven times its current market value-at the end of December 2015 from Rs 15,600 crore in 2011-12. “As of now, the asset is debt free”, JSW Energy joint MD Sanjay Sagar said.
Cash-starved JSPL has been looking to sell its assets as part of monetisation plans to generate cash flows.
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The sale of the plant, owned by JSPL unit’s Jindal Power Ltd, will help the former meet interest payment obligations and pare overall debt, the report added.
