JSPL to divest its coal fired power business to reduce emissions, debt

The Board of directors of Jindal Steel & Power Limited ("JSPL" or "the Company") have approved the divestment of its entire equity interest (representing 96.42% of the issued and paid up capital) in Jindal Power Limited ("Target Company"), a material subsidiary of the Company, by way of sale of shares, to Worldone Private Limited ("Acquirer"), a Promoter Group Company and a related party to the Company. The equity value is an all-cash offer of INR 3015,00,00,000/- (Indian Rupees Three Thousand and Fifteen Crores) for 96.42% stake in the Target Company (the "Proposed Sale").

The Acquirer was selected by way of an elaborate bidding process run by an independent third-party merchant banker, Grant Thornton Advisory Pvt. Ltd., wherein the Acquirer submitted the highest binding bid on acceptable terms and conditions. The Proposed Sale is subject to necessary approvals of shareholders of the Company, regulatory approvals, approvals from lenders of the Company and Target Company, contractual approvals and such other approvals, consents, permissions and sanctions as may be necessary in line with extant relevant guidelines. The long stop date for completion of the Proposed Sale is 12 months which maybe mutually extended by the parties thereto, failing which the Proposed Sale shall terminate.

The Board approved the execution of a binding share purchase agreement, a loan agreement and other ancillary agreements, in relation to the Proposed Sale and accordingly, the Company has executed (i) a share purchase agreement dated April 26, 2021 (the "SPA") with the Acquirer and Target Company to capture the entire understanding between the parties in relation to the sale of shares held by the Company (representing 96.42% of the issued and paid up capital) in Target Company; and (ii) a loan agreement dated April 26, 2021 ("Loan Agreement") with the Target Company, to convert the existing capital advances and intercorporate deposits availed by the Company from the Target Company aggregating to Rs. 4386,28,55,824 (Rupees Four Thousand Three Hundred and Eighty Six Crores Twenty Eight Lacs Fifty Five Thousand Eight Hundred and Twenty Four) into an unsecured loan. As mentioned above, the Proposed Sale is subject to necessary approvals of shareholders of the Company, regulatory approvals, approvals of lenders of the Company as well as the Target Company, contractual approvals and such other approvals, consents, permissions and sanctions as may be necessary in line with extant relevant guidelines, and the long stop date for completion of the Proposed Sale is 12 months which may be mutually extended by the parties thereto, failing which the Proposed Sale shall terminate. Further, the Loan Agreement is subject to the necessary approvals of shareholders of Company, approvals of lenders of the Company as well as the Target Company and such other approvals, consents, permissions and sanctions as may be necessary.

The turnover (total income) of the Target Company for the year ended March 31, 2020 is INR 3,959.37 crores constituting 10.72% of the consolidated turnover (Total Income) of the Company for the Year ending March 31, 2020. The net worth of the Target Company included in the consolidated net worth of the Company, for the same period is INR 9,827.09 Crores.

The turnover (Total Income) of the Target Company for the 9-month period ended Dec 31, 2020 is INR 3,853.07 Crores constituting 13.95% of the consolidated turnover (Total Income) of the Company for the 9-month period ending December 31, 2020. The net worth of the Target Company included in the consolidated net worth of the Company, for the same period is INR 9,882.70 Crores.

The Board approved the convening of an Extraordinary General Meeting of the shareholders of the Company for seeking their approval for the Proposed Sale, Loan Agreement and other ancillary agreements.

Shri V.R. Sharma, MD- JSPL said, "This divestment is in line with our ESG objectives to be amongst the top 10 lowest Co2 emitting steel companies of the world. It is yet another step towards our vision to reduce debt substantially and create a robust balance sheet for our investors and stakeholders. Looking to the future, JSPL will be a key growth driver in the Indian steel industry and will now focus on undertaking expansion of its Angul steel plant from 6 MTPA to 12 MTPA. Infrastructure spending in India is bound to grow exponentially and JSPL is fully aligned with GoI's vision of achieving 300 MTPA steel production by 2030. We firmly believe in the India growth story and its potential to be an engine of global growth."

Shares of JINDAL STEEL & POWER LTD. was last trading in BSE at Rs.442.3 as compared to the previous close of Rs. 436.75. The total number of shares traded during the day was 499768 in over 5415 trades.

The stock hit an intraday high of Rs. 451.5 and intraday low of 438. The net turnover during the day was Rs. 222413373.

Source : Equity Bulls

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