Anil Ambani Group company Reliance Power on Sunday announced that it has signed an initial agreement to acquire all the three hydroelectric power plants of Jaiprakash Associates ltd.
"Reliance CleanGen ltd (RCl), a 100 per cent subsidiary of Reliance Power ltd, and Jaiprakash Power Ventures ltd (JPVl), a subsidiary of Jaiprakash Associates ltd (JAl), today announced the signing of an exclusive Memorandum of Understanding (MOU), for the 100 per cent acquisition by RCl of the entire hydroelectric power portfolio of JPVl," the company said in a statement on Sunday evening.
JPVl's hydroelectric power portfolio has an aggregate capacity of nearly 1,800 MW, fully in operation, the largest in the private sector in India, and with an asset base of over Rs 10,000 crore.
The portfolio comprises of the three plants, with an asset life of over 50 years, each using run-of-the-river technology to convert natural water flow to electricity, eliminating the need for a large reservoir.
JAl intends to utilise the entire proceeds of the proposed transaction to reduce its outstanding debt, and thereby deleverage its consolidated balance sheet, Reliance Power said.
"The completion of the proposed transaction would make Reliance Power the largest provider of hydroelectric power in the private sector in India," it added.
Currently, Reliance Power has hydroelectric power projects aggregating over 5,000 MW under development, of which 4,200 MW are located in Arunachal Pradesh, 700 MW in Himachal Pradesh and 400 MW in Uttarakhand.
SBI Capital Markets ltd are acting as advisors for the proposed Transaction. Reliance Power has the largest portfolio of power projects in the private sector in India, based on coal, gas, hydro and renewable energy, with an operating portfolio of 4,525 MW.
The company also has the largest captive coal reserves in the private sector in India, estimated at 2 billion tonnes. Besides, the company is developing 3 coal mines in Indonesia with an estimated resource potential of nearly 2 billion tonnes, and is also developing Coal Bed Methane blocks.
The indebted Jaypee group had received a major jolt in its effort to pared down its huge debt bruden after Abu Dhabi-based TAQA withdrew agreement to acquire two hydorpower projects.
Jaiprakash Power(JPVl) in a notice to stock exchanges last week 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.
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.