The IL&FS Board on Tuesday sought the approval of the National Company Law Tribunal (NCLT) to sell seven wind assets to Japan's Orix Corporation for Rs 4,800 crore, which will help reduce its debt burden of Rs 94,000 crore. Orix Corporation of Japan is already an equity partner in the group and owns 49 per cent stake in each of these seven operating wind power plants.
The seven wind power SPVs are Lalpur Wind Energy, Etesian Urja, Khandke Wind Energy, Retadi Wind Power, Wind Urja Indiae, Tadas Wind Energy and Kaze Energy.
The proceeds from the sale of these seven assets will be kept in an escrow account as was recommended by DK Jain, retired judge of the Supreme Court.
Earlier this month, IL&FS in a statement had said it had decided to completely sell wind energy business, held under IL&FS Wind Energy to Orix, with NCLT for final approval. The proposal was filed before the tribunal after completing a binding share purchase agreement with Orix and obtaining an in-principle approval from all lenders, subject to NCLT approval.
In the statement, IL&FS had said it had already received approval for sale of its wind energy business from Jain, appointed by the NCLAT to supervise the resolution process of IL&FS group, earlier last month.
Jain had approved sale on conditions that the proposal will be placed before the NCLT for its approval and the bid amount realised from the sale be kept in an escrow account.
This amount in escrow account will only to be disbursed in accordance with the directions from NCLT/NCLAT, as applicable.
Orix owns 49 percent stake in each of seven operating wind power plants of the IL&FS group, and had expressed its intent to buy out the remaining 51 percent stake held by IL&FS Wind Energy.
This intent to buy 51 percent stake was in exercise of Orix's right under the terms of an existing MoU wherein Orix can match the price offered by the highest bidder for purchasing these assets.
Orix decided to match the offer of the highest bidder, of about Rs 4,800 crore for 100 percent of enterprise value, contemplating no haircut to the debt of the SPVs aggregating to around Rs 3,700 crore. Some of the major lenders in the SPVs include Power Finance Corporation, BoB (working capital), and India Infra Debt with totalling about Rs 3,700 crore, excluding interest.
The IL&FS board has already approved the sale of these entities to Orix on June 28.