ArcelorMittal- Nippon Steel in talks to buy 500 Mw Bhander power unit
Power plant crucial to make its 9.6 MT plant self-sufficient
 "essar steel, steel")
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AM/NS India — a joint venture (JV) between ArcelorMittal and Nippon Steel that has acquired Essar Steel — is in advanced stage of discussions with Edelweiss ARC to buy Bhander power plant.
Bhander Power, a 500 megawatts (Mw) natural gas-based plant located in Hazira, Gujarat, is captive to Essar steel plant, and was till recently owned by the Ruias, promoters of the Essar group.
The power plant is being sold by Edelweiss under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act.
“It (Bhander power plant) is a good asset. We hope to close it soon,” said people close to Edelweiss. They, however, said the deal was yet to be finalised.
AM/NS India declined to comment.
An Essar official said: “We confirm having sold this plant to Edelweiss for a sum of Rs 475 crore. Lenders will recover their full loan value.”
Essar’s move is part of an ongoing effort to bring down the leverage across the group. “We have already reduced debt by over Rs 1.4 trillion in the last two years, which is the largest by any Indian corporate,” the official said.
“The balance residual group-wide debt is primarily concentrated in the power portfolio that we are now addressing by significantly reducing it. Sale of Bhander Power to Edelweiss is a step in that direction,” the official added. The Essar group is aiming to reduce debt in the power portfolio by over 60 per cent or Rs 12,000 crore.
In December, Essar Steel was acquired by ArcelorMittal and Nippon Steel jointly under the insolvency law in a Rs 42,000-crore deal. Essar Steel's assets, however, did not include certain assets ancillary to the steel plant, such as a slurry pipeline, power plants and port facilities.
The acquisition of Bhander power plant is part of AM/NS India’s move to secure captive resources and expand margins. The gas-based power plant is one of the captive power sources for the steel plant.
Aditya Mittal, president and group chief financial officer of ArcelorMittal, had said in an earnings call recently, that Essar Steel’s balance sheet has some cash because of the equity injection made, and small acquisitions like the slurry pipeline or power plants would keep it in a net cash position. ArcelorMittal has made an equity contribution of $1.6 billion for the acquisition of Essar Steel.
Bhander Power, a 500 megawatts (Mw) natural gas-based plant located in Hazira, Gujarat, is captive to Essar steel plant, and was till recently owned by the Ruias, promoters of the Essar group.
The power plant is being sold by Edelweiss under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act.
“It (Bhander power plant) is a good asset. We hope to close it soon,” said people close to Edelweiss. They, however, said the deal was yet to be finalised.
AM/NS India declined to comment.
An Essar official said: “We confirm having sold this plant to Edelweiss for a sum of Rs 475 crore. Lenders will recover their full loan value.”
Essar’s move is part of an ongoing effort to bring down the leverage across the group. “We have already reduced debt by over Rs 1.4 trillion in the last two years, which is the largest by any Indian corporate,” the official said.
“The balance residual group-wide debt is primarily concentrated in the power portfolio that we are now addressing by significantly reducing it. Sale of Bhander Power to Edelweiss is a step in that direction,” the official added. The Essar group is aiming to reduce debt in the power portfolio by over 60 per cent or Rs 12,000 crore.
In December, Essar Steel was acquired by ArcelorMittal and Nippon Steel jointly under the insolvency law in a Rs 42,000-crore deal. Essar Steel's assets, however, did not include certain assets ancillary to the steel plant, such as a slurry pipeline, power plants and port facilities.
The acquisition of Bhander power plant is part of AM/NS India’s move to secure captive resources and expand margins. The gas-based power plant is one of the captive power sources for the steel plant.
Aditya Mittal, president and group chief financial officer of ArcelorMittal, had said in an earnings call recently, that Essar Steel’s balance sheet has some cash because of the equity injection made, and small acquisitions like the slurry pipeline or power plants would keep it in a net cash position. ArcelorMittal has made an equity contribution of $1.6 billion for the acquisition of Essar Steel.
Topics : ArcelorMittal Nippon Steel Power plant Essar Steel