Jaiprakash Power lenders invoke SDR, JSW deal unlikely

JSW Energy Ltd’s plan to buy the 500-MW Bina thermal power unit from Jaiprakash Power Ventures Ltd may come unstuck as the latter’s lenders have invoked strategic debt restructuring (SDR), according to two people familiar with the discussions. The deal, which has been under discussion since 2015 has made slow progress, the people said, requesting anonymity.

“The deal is unlikely to happen now due to SDR in Jaiprakash Power,” one of the two cited above said. The power producer, which is part of the debt-laden Jaypee Group, had said in July that its lenders have recommended SDR— the second group company after Jaiprakash Associates Ltd, where lenders recommended invoking SDR.

Under the SDR mechanism, banks can convert a part of the debt in a company to majority equity, taking over operational control.

Jaiprakash Power Ventures on Saturday alloted 305.8 crore equity shares to its lenders as part of debt restructuring scheme, which would reduce the debt of ₹3,058 crore.

Both JSW Energy and Jaiprakash Power Ventures did not respond to emailed queries and subsequent requests for comments since February 14.

According to the agreement between the two companies, the deadline of the Bina plant’s acquisition is set for May 31, 2017 at an enterprise value of ₹2,700 crore.

On September 8, 2015, JSW Energy signed a binding memorandum of understanding (MoU) with Jaiprakash Power Ventures to buy the 500-MW Bina plant. In July 2016, Jaiprakash Power formally approved the deal, which was to be executed through the sale of shareholding in a special purpose acquisition entity called Bina Power Supply Ltd.