Jaiprakash-JSW deal for Bina plant in slow track

Jaiprakash considering other option, including debt restructuring; might reconsider Rs 2,700-cr deal

The Manoj Gaur-led Jaiprakash Power Ventures’ Rs 2,700-crore deal with JSW Energy, for the sale of its Bina power plant, has been put in the slow lane, according to people with direct knowledge of the deal. In July, Jaiprakash Power signed an agreement with JSW Energy to sell its full stake in its 500-Mw plant in Madhya Pradesh for Rs 2,700 crore.

“The deal is going slow as Jaiprakash Power is also considering options to restructure a debt, including the S4A (Scheme for Sustainable Structuring of Stressed Assets). If the restructuring works out, the company may not want to sell Bina,” said a banker close to the development. 

The S4A scheme allows lenders to separate sustainable debt from unsustainable debt and then consider equity conversion options for the latter.

E-mail queries to both Jaiprakash Power and JSW Energy remained unanswered. 

The deal has been a pain point between the two companies for close to two years. 

In September 2014, Jaiprakash Power announced its intent to sell three of its power plants to JSW Energy, Bina and two hydro assets — Karcham Wangtoo and Baspa. The deal for the two hydro assets was completed in September 

2015 for an enterprise value of Rs 9,200 crore. 

The deal for Bina, however, remained in limbo. Interest in the deal was renewed with an agreement announced in July this year.

“Even after a definitive agreement is signed, the buyer will do some further due-diligence on the asset. The deal is at that stage. Valuation-wise, it is a good deal for JSW Energy and any deal should be a good deal for the debt-ridden Jaypee group,” said an analyst who tracks Jaiprakash Power.

In July, Jaiprakash Power said the deal was expected to be completed by May 2017.

As of March, Jaiprakash Power had total debt of Rs 25,265.57 crore. The debt-laden Jaypee Group has been on an asset sale spree for the past three years. The group has divested from multiple cement and power assets in a bid to cut down its ballooning debt. A part of its deleveraging plan, Jaiprakash Power in October also agreed to sell its two-million-tonne per annum Nigrie cement grinding unit to Orient Cement at an enterprise value of Rs 500 crore. On July 26, Jaiprakash Power informed the exchanges that the joint lenders forum meeting, held to review the progress made so far on the corrective action plan, recommended the invocation of Strategic Debt Restructuring.

After the sale of its two hydro assets to JSW Energy, Jaiprakash Power now operates the 400-Mw Vishnuprayag Hydro Power Plant, 1,320-Mw Bara Thermal Power Plant and 1,320-Mw Nigrie Thermal Power Plant and 500-Mw Bina Thermal Power Plant.