Tata Power-backed Resurgent Power closes deal for 75% in Prayagraj Power

Our Bureau | | Updated on: Nov 15, 2018

Resurgent Power Ventures Pte. Limited (Resurgent Power) has announced closing the deal for acquiring 75 per cent stake in Jaiprakash Associates Ltd’s Prayagraj Power, a 3X660MW coal-based power plant in UP from the consortium of lenders led by SBI.

Renascent Power Ventures Private Limited (Renascent Power), a wholly-owned subsidiary of Resurgent Power has signed a share purchase agreement with a consortium of lenders led by State Bank of India (SBI) to acquire 75.01 per cent stake in Prayagraj Power Generation Company Limited (PPGCL), which owns and operates a 1,980 MW supercritical power plant in the state of Uttar Pradesh, India, Tata Power said in a statement. 

The SPA will be subject to customary approvals from regulatory authorities and the transaction is expected to be closed over the next few months, it added.

Resurgent Power, a joint venture between Tata Power International Pte. Ltd, a subsidiary of Tata Power, and ICICI Bank as well as other global investors including Kuwait Investment Authority, State General Reserve Fund of Oman, has submitted its Rs. 6,000 crore bid for Prayagraj Power earlier this year offering a 15 per cent stake to the lenders. The 10 per cent stake would remain with the original promoter, Jaiprakash Associates.

JSW Energy was another company in race for Prayagraj Power - the company has offered lenders around Rs. 6,200 crore. However, its offer was not accepted as was submitted after the letter of intents issued to Resurgent Power.

According to Praveer Sinha, CEO & MD, Tata Power and Director of Resurgent Power, the company has been evaluating various assets that meets its investment objective and Prayagraj fitted into that. “Resurgent looks forward to maximizing its potential using the expertise of all the partners,”said.

Earlier this month, in the interview with BusinessLine, Sinha noted the transaction required the approval from 23 lenders to the project. He also added that once the transaction goes through, Tata Power may invest around Rs. 500 crore over 2-3 years in Prayagraj plant to upgrade it.

Stress resolution

The deal for Prayagraj Power marks the second resolution of stressed power asset outside of the National Company Law Tribunal (NCLT) after the Supreme Court has stayed insolvency proceedings against companies in power, sugar and shipping sectors that have challenged the Reserve Bank of India (RBI)’s February 12 circular on non-performing loans. 

SKS Power’s 1,200 MW Chhattisgarh thermal power project has emerged as the first stressed power asset that has been acquired by Singapore-based Agritrade Resources from the consortium of lenders led by SBI , L&T Financial Services and PTC, for Rs 2,170 crore. The deal was announced on November, 13. 

The Supreme Court was expected to hear the matter on November, 14, however, it has deferred the hearing to a later date ordering prior segregation of petitions related to RBI’s circular into two categories - one where petitions challenge the constitutional validity of insolvency proceedings in general and another where the parties challenge RBI’s February 12 circular. This, according to industry experts, provides companies as well as lenders with more time to complete the resolution process for those accounts that have been close to resolution. 

Published on November 15, 2018
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