JSW Energy to buy JSPL's 1,000 MW Tanmar plant for at least Rs. 4,000 cr.

Sajjan Jindal promoted JSW Energy has agreed to purchase younger brother Naveen Jindal promoted Jindal Steel and Power Ltd's 1,000 MW power plant in Tanmar, Chhattisgarh for at least ₹ 4,000 crore.

The consideration would increase to ₹6,500 crore if the power plant is completely secured for fuel and enters into a long term power purchase agreement providing a certain minimum return threshold, the two companies said in a statement.

The deal, which was expected to be announced last week, was made public in a statement sent after midnight on Tuesday/Wednesday early morning.

According to the two companies filings on the BSE, the transaction has to be completed on or before June 30, 2018.

The filing also added that since Sajjan Jindal and Naveen Jindal are brothers, the transaction is a related party transaction. However, since it is on the basis of an independent valuation, the deal has been struck at an arm's length basis.

The deal will enhance JSW Energy's capacity to 5,531 MW. JSPL will utilise the funds for cutting down its debt.

As of September 2015, JSPL had a consolidated debt of Rs. 42,534 crore.

Post the acquisition, JSW Energy will have total installed power generation capacity of 5,531 MW, said the company in a statement on Wednesday.

'This (the acquisition) will diversify JSW Energy’s presence towards the eastern region of the country and in the state of Chhattisgarh, which is rich in coal reserves. The transaction is structured to be value-accretive to the shareholders of the company immediately upon consummation,' JSW Energy said in the statement.

HBL