Tata Power ends Olympus deal to raise $300 m

Tata Power has terminated the investment pact it had signed with Olympus Capital Holding Asia for raising $300 million.

Tata Power informed stock exchanges that the investment was subject to completion of certain conditions and they were not fulfilled.

Last June, Tata Power signed an agreement to raise $300 million in Bhira Investments and Bhivpuri Investments Coal Special Purpose Vehicles (SPVs) through shares with differential rights to be issued to Olympus Capital Holdings Asia, a middle market private equity firm. The funds were to be used for acquisitions or debt reduction.

Differential rights

Tata Power had said that Olympus Capital's shareholding in the coal SPVs may be in the range of 14-15 per cent, or about 4.5 per cent of its holding in the coal mines. Tata Power holds its interest in the KPC and Arutmin coal mines in Indonesia through these SPVs.

Tata Power's Rs 10 shares were up one per cent on NSE on Monday at Rs 1,379.85.

Tata Power planned to issue to Olympus differential rights shares with no dividend rights which were the subject of a capital protection arrangement at the end of five years from the date of closing the transaction, unless converted. Further, the shares were fully convertible into ordinary shares through the end of the fifth year from the date of closing at the option of the holders, the company said in June last. The capital protection arrangement could be serviced either from Tata Power or the coal SPVs.

In June 2007, Tata Power acquired 30 per cent stake in Indonesian coal mines, KPC and Arutmin, with $1,225 million which was funded by a bridge loan of $950 million borrowed by Tata Power (Cyprus) [Bhivpuri Investments], $ 273 million as shareholder loan from the company to Tata Power (Mauritius) [Bhira Investments], besides $1 million equity in Bhivpuri and Bhira investment companies.

The bridge loan was subsequently refinanced.

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