JSW Energy of Sajjan Jindal withdrew the proposal to purchase the 500 MW Bina Power Plant of Jaiprakash Power Ventures. He has taken this decision after waiting for the approval of the deal from banks for several months. JSW had announced to buy Bina Plant in 2015. It was believed that the deal could be in the Rs 2,700 Crore. However, banks providing loans for the project did not give necessary approvals for the deal. It was reported in July that JSW Energy CEO Prashant Jain had said that the deal could be broken.
JSW Energy stated, “After the long delay, the proposal to buy the Bina project is over.” In May, JSW Energy had said that the date of completion of a deadline for this deal was increased from May 31, 2017, to December 31, 2017.
Jaiprakash Power plants are facing multiple issues in running the business. These include delays in power purchase agreements, purchase of less power from the distribution companies of states and drop in merchant power rates. Due to heavy debt and low cash flow, the company has not been able to repay the loan installment on time. Therefore, the bankers of the company had used the Strategic Debt Restructuring (SDR) option and immediately decided to sell the Bina Power Plant.
In February last year, Jaiprakash Power Ventures got shareholder approval for debt restructuring. After this, the company had allocated Rs 305.80 Crore shares under the debt restructuring scheme to the banks. The objective was to reduce the debt of the company to Rs 3,058 Crore. After this allotment, the financial institutions had about 51% stake in the company. And owing to this, control of Bina Power Plant slipped off from its hand.
The company has also temporarily postponed its plan to move ahead with Japan’s Toshiba over the power equipment joint venture.