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
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