Jaiprakash Power sells 2 hydro-power units to JSW Energy for Rs9,700 cr

Debt-ridden Jaiprakash Power Ventures Ltd (JPVL) has sold the entire stake in its two hydro power projects in Himachal Pradesh to Sajjan Jindal group company JSW Energy for a total of Rs9,700 crore, in one of the biggest power sector deals in the country.

JPVL said it has concluded the sale of the entire share capital of Himachal Baspa Power Company Limited (HBPCL) to JSW Energy Limited at an enterprise value of Rs9,700 crore, which inter-alia includes Rs300 crore payable upon receipt of certain additional consents and approvals related to the Karcham Wangtoo Hydro Electric Project.

Further, JPVL has paid a compensation of Rs150 crore to HBPCL, out of expected profit from these plants accruing to it from 1 September 2015.

JPVL has also entered into a binding memorandum of understanding (MoU) with JSW Energy Limited for sale of 100 per cent stake of its 500 MW Bina Thermal Power Plant to JSW Energy Limited.

''This is the largest transaction in the power sector in the country and two of JPVL's most prized assets are going to JSW Energy Limited, another notable player in the power sector,'' Manoj Gaur, chairman of Jaypee Group, said on conclusion of the sale.

He expressed satisfaction that the transaction closed in a very cordial environment and wished Jindal group chairman Sajjan Jindal and JSW Energy Limited the best in their endeavours.

The closure of the deal will also help Jaypee Group reduce its debt and emerge a leaner and more profitable corporate, he added.

With the sale of its two hydro power plants, JP Group has sold a fair chunk of its earning assets - hydro power plants are high-margin businesses, with no real cost.

The transaction will not impact JSW's debt while JP Group's debt would stand at around Rs45,000 crore.

As of March 2015, Jaiprakash Group had a total debt Rs63,999.15 crore, according to data from corporate database Capitaline.

JP has a few assets left to be monetised but they are non-operational or are in their early stages.

SBI Capital Markets Limited and ICICI Securities Limited acted as financial advisors to the Jaiprakash Industries in the transaction while Vaish Associates offered legal advice and Bansi S Mehta & Company were the tax and structuring advisors for the transaction.

After the latest divestment, JPVL will continue to own 400 MW Vishnuprayag HEP, 500 MW Bina Thermal Power Plant, 1,320 MW Nigrie Super Thermal Power Plant and 74 per cent stake in JPL, all of which are operational, besides the 1,980 MW Bara Thermal Power Plant being set up by its subsidiary PPGCL, which is expected to achieve COD in the current financial year.