Brook­field, Resur­gent Bid for Debt-hit Jaiprakash Power

Around .₹ 7,000-cr bid by both firms is lower than lenders’ ex­pec­ta­tion of .₹ 10,000 cr

The Economic Times - - Companies: Pursuit Of Profit - Ra­chita.Prasad@ times­group.com

Mum­bai: Canada’s Brook­field As­set Man­age­ment and Resur­gent Power have bid for debt-rid­den Jaiprakash Power Ven­tures, which has been put on the block by its lenders un­der the strate­gic debt re­struc­tur­ing mech­a­nism, ac­cord­ing to two peo­ple fa­mil­iar with the mat­ter. Resur­gent Power, in which Tata Power and ICICI Ven­tures hold stakes, and Brook­field were among five com­pa­nies that showed in­ter­est in Jaiprakash Power Ven­tures. The peo­ple said both have bid about ₹ 7,000 crore, lower than the lenders’ ex­pec­ta­tion of about ₹ 10,000 crore, for a stake in the com­pany. Jaiprakash has debt of over ₹ 12,000 crore and a mar­ket value of ₹ 4,814.8 crore.

A group of lenders led by ICICI Bank had in­vited bids for at least 30% in the be­lea­guered power util­ity, which is part of the Manoj Gaur-led Jaypee Group. Last year, 23 lenders con­verted a por­tion of their debt into eq­uity rep­re­sent­ing 51% in the com­pany to gain con­trol of the firm af­ter it failed to re­pay loans. The stake sale will help the lenders re­cover some dues. ICICI is the largest share­holder among the banks with a 13% stake. A query sent to Jaiprakash Power re­mained unan­swered. In re­sponse to an ET query, Brook­field said, “As a pol­icy, Brook­field does not com­ment on mar­ket spec­u­la­tion.” Resur­gent Power could not be im­me­di­ately con­tacted for com­ment.

“SBI Cap­i­tal is eval­u­at­ing the bids and then ICICI Bank will take a call,” a se­nior banker told ET. Another banker said the two bid­ders have also of­fered so­lu­tions to re­vive Jaypee’s Praya­graj Power Gen­er­a­tion pro­ject, which works in their favour.

The banks had con­verted part of their debt into eq­uity at par with its face value of ₹ 10 each. Their stake has shed value since then, as the shares of the firm now trade be­low its face value. The shares closed lit­tle changed at ₹ 8.03 on the BSE on Mon­day. The other com­pa­nies that showed ini­tial in­ter­est in bid­ding were In­dia Power Cor­po­ra­tion, JSW En­ergy-Pi­ra­mal and Bain Cap­i­tal.

Af­ter the re­struc­tur­ing, Jaiprakash Power Ven­tures had debt of ₹ 12,439.8 crore at the end of March, ac­cord­ing to the com­pany’s an­nual re­port. The com­pany has an op­er­a­tional power gen­er­a­tion ca­pac­ity of 2,220 MW, which in­cludes one hy­dropower plant in Ut­tarak­hand and two coal-fired power plants in Mad­hya Pradesh. The com­pany has a pres­ence in power trans­mis­sion through joint ven­ture Jaypee Pow­er­grid, where it has 74%, while state-run Power Grid Cor­po­ra­tion of In­dia holds the re­main­der.

Jaiprakash Power had debt of about ₹ 22,400 crore as of March 31, 2016, be­fore the re­struc­tur­ing. The com­pany was un­able to ser­vice its debt due to muted cash flows and widen­ing losses. The re­struc­tur­ing helps lenders con­vert part of the debt into eq­uity and sub­se­quently find new own­ers for the com­pany.

The other com­pa­nies that showed ini­tial in­ter­est in bid­ding were In­dia Power Cor­po­ra­tion, JSW En­er­gyPi­ra­mal and Bain Cap­i­tal

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