May 04 2016, 09.22 AM IST || Pocket News Alert
JSW Energy Limited (JSW Energy) (BSE Scrip Code: 533148, NSE Scrip Code: JSWENERGY), has executed documents to acquire from Thic"! Steel & Power Limited (JSPL) and other shareholders, 100% stake in Everbest Steel and Mining Holdings Limited ("Target SPV").
The board of directors of Jindal Steel & Power Limited and Jindal Power Limited have approved the transfer of the 1000 MW (4x250 MW) thermal power project located at Village Tamnar, District Raigarh in the State of Chhattisgarh into the Target SPV as a going concern through a scheme of arrangement under Sections 391 - 394 of the Companies Act, 1956. Target SPV is currently 99% owned by JSPL.
Subsequent to the receipt of shareholders and other statutory approvals (including approval from the Competition Commission of India (CCI)), the scheme of arrangement being made effective and subject to other terms and conditions agreed between JSW Energy and JSPL, JSW Energy proposes to acquire 100% (one hundred percent) of the securities of the Target SPV held by JSPL and other shareholders. The closing is subject to fulfillment of conditions precedent by the parties within the long stop date of June 30, 2018.
Subject to compliance with the terms and conditions and adjustment provisions contained in the definitive documents, the consideration payable by JSW Energy is linked to an enterprise value of Rs. 4,000 crore plus net currents assets, which would be increased to Rs. 6,500 crore if the 1,000 MW power plant is completely secured for fuel and enters into a long term PPA providing certain minimum return threshold.
The transaction also contemplates payment of an interest bearing advance of Rs. 500 crore pursuant to the receipt of approvals from the shareholders of the JSW Energy & JSPL and the CCI.
By agreeing to acquire 100% of the securities of the Target SPV, JSW Energy is moving a step forward towards its strategic vision of becoming a leading private sector power company in India. Post acquisition, the aggregate installed and operational power generation capacity of JSW Energy will enhance to 5,531 MW. This will diversify JSW Energy's presence towards the Eastern Region of the country and in the State of Chhanisgarh which is rich in coal reserves. The transaction is structured to be value accretive to the shareholders of the company immediately upon consummation.
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 a reasonable valuation and realise its growth ambitions.
With the government's efforts to revive the investment cycle, faster implementation of reforms, and an easy monetary policy environment, the outlook for Indian economic growth is looking up and power demand is already showing signs of recovery. This acquisition, therefore, fits in very well with JSW Energy's bullish outlook on the Energy Business in India.
Rationale for the acquisition:
• Operational Capacity of 5,531 MW (no project execution risk) o Enhancement by 1,000MW quality operational asset Diversified Geographical Footprint o Avoids concentration of generating assets in a particular region • Diversified Fuel Source o Marks entry into domestic coal based generation • Attractive Valuation o Good asset with proven track record at fair valuation • No significant liquidity or gearing impact o Long lead time for transaction closure
Commenting on the acquisition, Mr. Sanjay Sager, Joint Managing Director & CEO of JSW Energy, said: "This acquisition demonstrates JSW Energy's strategy to augment its existing portfolio with superior assets having potential for long term value creation for its stakeholders."
Cyril Amarchand Mangaldas were the legal advisors to the Company, and Pricewaterhouse Coopers carried out financial, accounting & tax due diligence.
About JSW Energy Limited JSW Energy Limited, part of the 1SW Group. is a growing energy company. The Group has diversified interests in carbon steel, power, mining, industrial gases. port facilities, cement and information technology. JSW Energy is working on power solutions in the states of Karnataka, Maharashtra, Rajasthan, Himachal Pradesh and Chhattisgarh. The Company has an operational capacity of 4,531 MW. The Company is an early entrant in the Power Trading and Power Transmission business and plans to enter into power distribution business generation through non-conventional energy sources and tic-ups with well- known equipment manufacturers and suppliers. It is working towards building a full service integrated energy business.
About .JSW Group
A US $11 billion conglomerate. the JSW Group is a part of the O.P. Jindal Group. JSW has set up business facilities in various core sectors of India. With verticals that are exploring innovative and sustainable avenues in steel, energy, infrastructure and cement, the Group is paving the way for India's development as a global superpower.