The indebted Jaypee group has received a major jolt in its effort to pared down its huge debt bruden. Jaiprakash Power Ventures, a part of Jaypee group on Thursday announced that Abu Dhabi-based TAQA has withdrawn Rs 9,689 crore deal agreement to acquire two hydorpower projects.
Jaiprakash Power(JPVL) in a notice to stock exchanges informed that TAQA’s decision to withdraw was due to a change in the business strategy and priorities of their group. However JPVL has said that such withdrawal makes TAQA liable to payment of break fee in terms of the acqusition agreement.
Abu Dhabi National Energy Company PSJC (TAQA) led consortium had in March 2014 agreed to purchase the Baspa Stage II and Karcham Wangtoo hydro powerelectric plants with combined capacity of 1392 megawatts (MW) for an enterprise deal value of $1.616 billion from JPVL. While TAQA had agreed to buy 51% stake, Canada’s Public Sector Pension Investment Board and IDFC Alternatives, the private equity arm of IDFC were to acquire the remaining stake.
With this deal called off, Jaypee group’s effective divestments for the fiscal 2014 would reduce from 15,869 crore to Rs 6,180 crore through its divestments of cement plants and land parcel. In March 2014, it had sold off its entire shareholding of 74% in Bokaro Jaypee Cement to Dalmia Bharat group for Rs 689 crore. Prior to that it had divested its two Gujarat cement plants to UltraTech for an enterprise value of Rs 3,800 crore and a sale of 300 acre land parcel in Noida.
The Jaiprakash Associates, the flagship company of Jaypee Group had a consolidated net debt of around Rs 58,911 crore as at end of fiscal 2014 excluding the proceeds from sale of cement plants in Gujarat and two hydro power projects.
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Reacting to the news, the stock of Jaiprakash Associates fell by over 2%, and was last trading at Rs 64.25 (at 1.00pm), down 2.65% over previous day’s close.