Billionaire Sajjan Jindal-led JSW Energy Ltd has cancelled a plan to purchase a 500-megawatt thermal power plant from Jaiprakash Power Ventures Ltd.
The plan, first unveiled in 2015, was for JSW Energy to buy the coal-fired Bina plant in Madhya Pradesh. In July 2016, the two companies signed a pact for JSW to acquire the plant for Rs 2,700 crore ($400 million then), including debt.
However, the deal depended on certain conditions that were to be fulfilled by 31 May 2017. The deadline was subsequently extended until 31 December 2017.
With the new deadline lapsing, the transaction has now been terminated, JSW said in a stock-exchange filing. It didn't specify what those conditions were.
The two companies had signed the preliminary pact for the power plant in 2015 when JSW Energy had also agreed to acquire two hydroelectric power plants from Jaiprakash Power for as much as Rs 9,275 crore. That deal helped JSW Energy to enter the hydroelectric power segment.
JSW Energy’s expansion through acquisitions was part of its plan to increase its power generation capacity to 10,000 MW by 2020. It operates thermal and hydro power plants with a total capacity of 4,531 MW, according to its website.
The company had followed the hydropower deal with the proposed acquisition in May 2016 of a 1,000-megawatt coal-fired power plant in Chhattisgarh from Jindal Steel and Power Ltd, a company controlled by Sajjan Jindal’s brother Naveen, for up to Rs 6,500 crore ($975 million) including debt.
For Jaiprakash Power, the sale of power plants would help it cut debt and reduce its interest costs. The utility is part of Noida-based Jaiprakash Associates Ltd, the flagship company of the debt-laden Jaypee Group. Jaiprakash Associates is one of several infrastructure developers in the country that have struggled to repay loans taken on earlier for expansion.
Jaiprakash Power is going through a process of strategic debt restructuring as per the Reserve Bank of India's guidelines. Last year, it had converted Rs 3,058 crore debt into equity shares allotted to its lenders. The lenders now control 51% of the company and are looking for a strategic buyer.
The company posted a consolidated net loss of Rs 1,232 crore on revenue of Rs 4,694 crore for 2016-17. It had total debt of around Rs 12,440 crore at the end of March 2017, according to its annual report.