After Jaypee's QIP, Abu Dhabi firm pulls out of deal

In a setback to Jaypee Group's debt-reduction plan, Abu Dhabi National Energy Company, or TAQA, has pulled out of an agreement to acquire two hydropower plants of its subsidiary Jaiprakash Power Ventures valued at around Rs 9,689 crore.

Earlier this month, Jaiprakash Associates, the flagship company of Jaypee Group, had raised Rs 1,500 crore through qualified institutional placement (QIP) of shares. The issue was oversubscribed and the funds raised through it will be used to repay or prepay certain loans, besides making investments in subsidiaries and joint ventures of the company, primarily in the cement and fertilisers space.

In an announcement to BSE on Thursday, Jaiprakash Power Ventures said the company received a notice from TAQA India Power Ventures that the company was withdrawing from the acquisition agreement signed in March due to a change in its group's business strategy and priorities. "The withdrawal makes TAQA liable to payment of break fee in terms of the said acquisition agreement," the company said its stock exchange filing.

SWITCHING OFF

• Rs 9,689 cr
  The amount Jaypee's deal with TAQA was expected to fetch
• Rs 1,500 cr
  The amount raised this month by Jaiprakash Associates, flagship company of Jaypee Group, through QIP of shares
• Rs 28,164 cr
  Jaiprakash Associates' standalone debt as on March 31, 2014
• Plants in the deal
  Karcham Wangtoo (capacity of 1,000 Mw) and Baspa-II (capacity of 300 Mw)

TAQA had in March said that a consortium led by it had agreed to buy the two hydropower plants - Karcham and Baspa in Himachal Pradesh - from Jaiprakash Power Ventures.

Under the agreement, TAQA was to have a 51 per cent stake, while Canada's PSP Investments 39 per cent and IDFC Alternatives 10 per cent.

The shares of Jaiprakash Power Ventures on Thursday fell seven per cent on BSE to close at Rs 19.20 apiece.

Though the group has been selling assets to reduce high debt, the standalone debt of Jaiprakash Associates still stood at Rs 28,164 crore as on March 31. Its interest cost for 2013-14 almost doubled to Rs 6,094 crore from Rs 3,134 crore 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. This is 35.77 per cent of our total principal standalone debt amount of Rs 28,164 crore as on March 31," the company said in its filing with the stock exchanges. However, it added it was regular in repayment across its obligations.

The group raised Rs 15,869 crore via sale of some power and cement assets and land parcels. This will help reduce its debt by about Rs 8,030 crore.