Lenders reject JSW's Monnet buying offer

JSW Energy called off its acquisition bid for Monnet Power as lenders rejected its offer to buy out Monnet Ispat's stake.

The company had signed a non-binding agreement with Monnet Ispat and Energy on July 9 for due-diligence of a possible acquisition of its subsidiary, Monnet Power, to buy the under-construction power plant.

However, JSW Energy on Thursday said it had made a proposal to Monnet Ispat for acquisition of a majority shareholding in Monnet Power, which was not accepted by lenders to the latter. Sources said the lenders were not willing to take a haircut as proposed by JSW.

JSW's move to buy Monnet's 1,050-Mw thermal capacity had coincided with the latter winning a coal block for supplies. The project, estimated to cost Rs 7,100 crore, was expected to be commissioned in 18 months.

The lending consortium to Monnet Ispat decided to invoke powers under the strategic debt restructuring (SDR) norms of the Reserve Bank of India to convert part of the company's debt into equity. Under the SDR, bankers had decided to convert Rs 815 crore worth of debt to majority equity in Monnet Power; this stake would be transferred to JSW Energy, as part of the proposal.

Monnet Power's total debt is at around Rs 5,000 crore. As on March 2016, Monnet Ispat Energy's total debt was at nearly Rs 12,500 crore.