Debt-laden Jaiprakash Power Ventures Ltd on Sunday said it had signed a deal to sell its entire hydropower portfolio to Reliance CleanGen, a wholly-owned subsidiary of Anil Ambani-controlled Reliance Power.
JVPL has a hydropower asset base -- three plants with an asset life of 50 years -- worth a little over Rs 10,000 crore (Rs 100 billion) and with a cumulative capacity of 1,800 Mw.
Jaiprakash Associates, of which JPVL is a subsidiary, is the flagship company of Jaypee Group.
On Sunday, it said in a statement it intended to ‘utilise the entire proceeds of the proposed transaction to reduce its outstanding debt, and thereby deleverage its consolidated balance sheet’.
An R-Power statement said: “Reliance CleanGen has signed a memorandum of understanding with JVPL for acquisition of its entire hydroelectric power portfolio.” SBI Capital Markets was the advisor for this transaction.
R-Power, which had a total debt of Rs 1,877 crore (Rs 18.77 billion) on its books as of March 2013, refused to divulge how it planned to finance this deal.
The company had reported a net profit of Rs 244 crore (Rs 2.44 billion) on a total income of Rs 1,811 crore (Rs 18.11 billion) for the June quarter of this financial year.
The development comes only three days after Abu Dhabi National Energy Company, or TAQA, pulled out of an agreement to acquire two of JPVL’s hydropower plants, valued at Rs 9,689 crore (Rs 96.89 billion).
Jaypee Group has been selling assets to reduce its high debt -- it had Rs 28,164 crore (Rs 281.64 billion) of debt on its book as on March 31. Its interest cost for 2013-14 almost doubled to Rs 6,094 crore (Rs 60.94 billion) from Rs 3,134 crore (Rs 31.34 billion) a year earlier.
Last month, the group informed investors it had broken loan agreements.
“The principal amount due under which our company is not in compliance with all covenants and ratios is Rs 10,079 crore (Rs 100.79 billion).
“This is 35.77 per cent of our total principal standalone debt amount of Rs 28,164 crore (Rs 281.64 billion) as on March 31,” the company said in its filing with the stock exchanges.
R-Power currently has 5,000 Mw of hydroelectric power projects under development. Of this, 4,200 Mw are located in Arunachal Pradesh, 700 Mw in Himachal Pradesh and 400 Mw in Uttarakhand.
Sources in R-Power said the company was hoping to touch an operational capacity of 7,800 Mw by 2015.
The company also claimed this, by its generation capacity and asset size, was the largest merger & acquisition deal in India’s infrastructure and power sector.
“Along with its renewable energy portfolio, the acquisition would also make R-Power one of the largest clean and green power companies in the country,” said an executive.
It would also make the company the largest hydropower-based electricity supplier in the country.