TAQA Bids Tata: Jaypee in a Lurch Over No Deal
TAQA Bids Tata: Jaypee in a Lurch Over No Deal
Abu Dhabi based energy company TAQA has withdrawn from an agreement for the acquisition of 2 hydro power projects from Jaiprakash Power Ventures leaving the latter short of Rs . 10 , 500 crores . The Jaypee group was relying on the Saudi group to bail it out of debt . Jaypee is currently on what the media is terming as a "debt reduction spree" . The company had been aiming to pare debt of around Rs. 15,000 crore this year through the deal. The 300 MW of Baspa hydroelectric plant and 1000MW of Karcham plant are based in Himachal Pradesh. In a statement issued by the Jaypee group at the time of filing, it has been declared that“.TAQA India Power Ventures informing us that they will be withdrawing from the acquisition agreement dated 1 March 2014 entered into between JP Power and TAQA. They have also stated that they have been constrained to take the said decision as a result of a change in the business strategy and priorities of their group.
This withdrawal also raises liability to payment of break fee for TAQA. In the month of March, 2014 the firm sold 300MW of Baspa hydroelectirlc plant and 1000MW of Karcham plant. The complete deal was valued at nearly Rs . 13, 100 crore. A senior TAQA official has also been quoted by the media as saying the breaking of the $1. 6 bullion deal to buy the 2 hydroelectric power plants is due to "a change in strategy". The official declined to be named as per briefing rules. In the month of March , the company had agrreed to buy the 2 power plants from Jaiprakash Power Ventures. Around $616 million was to be spent on equity in the plants an along with the bid to take over the non-resource project debt, the total enterprise value was around $16 billion as per the statement issued by a TAQA spokeperson at that time.
TAQA is a stage owned company with 50% of the consortium and it was to control the management as well as the operations of both the plants. The agreement also held that PSP Investments that is one of the biggest institutional investors in Canada would own about 39% and infrastructure fund run by IDFC Alternatives an Indian firm was to hold 10%. the Abu Dhabu based National Energy Company PSJC (TAQA) led consortium had agreed to purchase the Baspa Stage II and Karcham Wangtoo hydroelectric power plants with combined capacity of 1392 MW for enterprise deal valued at $1.616 billion.
With the deal having been cancelled, Jaypee's effective divestments for this year are set to reduce from 15, 869 crore to 6, 180 crore through the divestment of cement plants as well as land parcel. The group had sold its entire shareholding of 74% in Bokaro Jaypee Cement to Dalmia Bharat group for around Rs. 689 crore. Before this, 2 Gujarat cement plants had been divested to UltraTech for an enterprise value of Rs. 3,800 crore and selling of a land parcel in Noida of about 300 acre.
The Jaiprakash Associates which is a flagship company of the Jaypee group has acquired a consolidated net debt of around Rs. 58,911 crore at the end of the fiscal 2014 with the exclusion of proceeds from selling of the cement plants and the 2 hydropower projects.
