KSK Energy Ventures (KSKEV), a subsidiary of London Stock Exchange-listed power project firm KSK Power Ventur plc (KSK), has entered into an agreement with Lehman Bros group that gives it the right of first refusal to buy back part of the stake owned by the US firm that is currently in bankruptcy proceedings. KSK owns 51.32% in KSKEV through a wholly owned arm and now has the option to raise its holding by purchasing 3.67% from Lehman Bros entity LB Mauritius III Ltd for $52.7 million (~Rs 247.5 crore).
As per the deal signed on Monday, another unnamed third party has been granted the right to buy a separate chunk of shares owned by a different Lehman Bros affiliate cumulating to 2.83% stake for $40.5 million (~Rs 190 crore).
The agreement seems to have given KSK, as well as the unnamed investor, the right to acquire Lehman shares at Rs 180 a piece. KSKEV is currently trading at Rs 166 per share.
Lehman had invested Rs 339 crore in KSK January’08 to pick over 30% stake, months before it filed for bankruptcy. The shares were allotted at Rs 34.55 a piece. This means Lehman Bros would encash over 4x net returns in around three years time in this transaction.
Lehman Bros firms currently own 18.9% (70.7 million shares) in KSKEV. Of the total, 12.23% stake (13.7 million shares) is locked up until October 2011 through a share lock up agreement. KSK and another investor now has the right to buy out the balance 6.5% stake by June 2011.
In the event of KSK or the nominated alternate third party investor not exercising their respective rights, the agreement entitles Lehman Bros to sell the stake to investors of its choice after September 2011.
Lehman Bros group is currently in bankruptcy proceedings and is being administered by Alvarez & Marsal, its court approved restructuring firm. The agreement is part of the calibrated disengagement of Lehman from the KSK group.
KSK already has the right of first refusal on the 12.23% balance shareholding of Lehman Bros which are currently under lock-up.