Tractebel Power, of Belgium, has sold its 50 per cent stake in the 260 MW Jindal Tractebel Power Company to domestic financial institutions (FIs) and OP Jindal group companies for Rs 2000 million. The deal was finalised recently between financial institutions Industrial Development Bank of India (IDBI) and ICICI Ltd, and the OP Jindal group companies Saw Pipes and Jindal Power. While FIs would pick up a 38 per cent stake of Tractebel at par, Saw Pipes and Jindal Power would buy it at Rs 37 per share with a premium of Rs 27 per share. The consideration for FIs will be around Rs 1100 million and that of the other acquirers will be Rs 900 million.
Jindal Tractebel Power Company, a 50:50 joint venture between Jindal Vijay Nagar Steel Company and Tractebel, had set up a 260 MW power project to supply the 1.6 million tonne steel unit. The total cost of the project is Rs 11000 million with a Rs 8000 million debt. After the acquisition, the OP Jindal group will raise its stake to 62 per cent from the earlier 50 per cent. In an earlier plan, JVSL was expected to increase its stake by one per cent and Tractebel to sell its 49 per cent stake to an interested party.
A condition of the agreement is that FIs will have to hold on to their 38 per cent stake for five years with an assured return of 16 per cent from the power plant by Jindals. After five years, Jindals will have the first right of refusal on the FI’s 38 per cent. Originally Jindals had tentatively planned to buy out the Tractebel holding when it became available, but a steel industry a slow down coupled with the fall in international steel prices to $240 per tonne and the US threatening anti-dumping duty on Indian steel exports, has compromised Jindals ability to adhere to that proposal.