Jindals Must Buy Tractebel Stake In Venture, Hint Fis

The financial institutions have decided against warehousing Belgian power company Tractebel's 50 per cent equity stake in Jindal Tractebel Power Co (JTPC), and have "advised" the Jindals to buy out the stake.

This comes close on the heels of a second request from the Jindals to warehouse the Tractebel stake till such time as the steel company is in a position to buy out the entire stake. Jindals had also sought to bring in a strategic partner, but the move failed.

Senior Jindal group executives told Business Standard, "The financial institutions have agreed to give a corresponding loan to the company to buy out the Tractebel stake." The combined loan amount sanctioned by IDBI and ICICI is around Rs 95 crore, they added.

However, the total value of the equity has not been finalised yet. Earlier the 49 per cent equity had been valued at around $42 million, but the valuation could change now as the power company has been making a cash surplus to the tune of Rs 70-80 crore and operating at a plant load factor (PLF) of 97 per cent.

The stalemate over the valuation of the Tractebel stake has been the issue from the very beginning. The Belgium power company expects a price higher than the $42 million offered.

Jindal Tractebel, the 260 mw joint venture, which is also the captive power project of the group's hot-rolled coils complex at Bellary in Karnataka, was originally promoted as a 50:50 venture. But the Jindals were planning to buy one per cent additional stake in the company and offer the remaining 49 per cent to the institutions.

Jindals had been in talks with PowerGen, PSEG and Ogden Energy for the Tractabel stake sale. However, the discussions failed to materialise.