JSW Energy's Bina deal trips

Calcutta: JSW Energy's deal to buy a 500-mega watt thermal power plant from Jaiprakash Power Ventures has bitten the dust after the latter tripped on its debt obligations.

The company had set December 31, 2017 as the "long stop date" to conclude the deal, which involved the fulfilment of some conditions. As the deal could not go through within the time limit, the proposed transaction has been terminated, JSW Energy informed the bourses on Monday.

The plan, announced on July 18, 2016, involved the transfer of the Bina plant to Bina Power Supply and then the sale of the subsidiary to JSW Energy. On May 12, 2017, JSW announced the "long stop date".

By that time, however, Jaiprakash Power Venture had slipped into strategic debt restructuring as it could not service debt. After the invocation of the SDR by the lenders, the company had to issue shares worth Rs 3,058 crore to banks and financial institutions to pare down debt.

Following the conversion, lenders, led by ICICI Bank, hold more than 51 per cent equity of Jaiprakash. Sources said the lenders were unwilling to clear the deal with JSW.

"They (lenders) didn't agree to the deal as it (Bina plant) was effectively the only cash cow left in the company," sources close the development claimed.

The development comes on a day reports swirled that Jaiprakash Associates, the flagship of Jaiprakash Group, promoted by Jaiprakash Gaur and now managed by his son Manoj Gaur, had been sent to the National Company Law Tribunal (NCLT) for a corporate resolution process. However, there was no clarity on the report.

Jaiprakash Power Venture has 4,000 mega watt of assets under its fold. The lenders are trying to sell the assets to pare their exposure in the company. A piecemeal sale of the Bina plant may not be on the table.

The Bina plant has a power-purchase agreement (PPA) with the Madhya Pradesh State Electricity Board to supply 65 per cent of its production capacity. The rest is sold in the open market.

The deal was seen as value accretive for JSW when it was announced. However, the sector has seen a downturn in the absence of a PPA with state distribution companies and poor demand in the open market.

JSW Energy's power generation capacity stood at 4,531 MW at the end of March 31, 2017. Even as it had stated a long-term aim to reach 10,000 mega watt, the company recently said it intended to focus on improving cost efficiency and plant load factor for now.

The JSW Energy scrip closed at Rs 91.05, down Rs 1.25 or 1.35 per cent.


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