Our Correspondent
BHUBANESWAR/DHENKANAL: In a surprise move, Sajjan Jindal run JSW Energy said it has terminated its ₹5,321 crore deal to acquire GMR Kamalanga Energy in Odisha’s Dhenkanal due to COVID-19 related uncertainties.
In May, the sale of GMR Energy’s entire stake in GMR Kamalanga Energy Ltd to JSW Energy was put on hold due to COVID-19 outbreak. In February, JSW Energy had signed a share purchase agreement to acquire 100% of GMR Kamalanga Energy, which owns and operates a 1,050 MW (3×350 MW) thermal power plant in Odisha, for ₹5,321 crore (subject to working capital and other adjustments).
The JSW Energy, in October last, had announced the acquisition of GMR Kamalanga Energy Ltd for ₹5,321 crore.GMR Kamalanga is a subsidiary of GMR Energy Ltd and operates a 1,050-MW thermal power plant in Odisha.
The acquisition was meant to be an all-cash deal and included three plants with 350 MW capacity each, located in Odisha’s Dhenkanal district, with revenues of ₹2,195 crore.The GMR Kamalanga Energy, a subsidiary of GMR Energy, owns and operates three units of 350 MW capacity at Dhenkanal in Odisha.
“With elapsing of long stop date, both parties have mutually agreed to terminate the transaction given continued uncertainty due to COVID-19 pandemic,” JSW Energy said in BSE filing on Friday.”The transaction has been put on hold given the ongoing uncertainty and will be revisited once the situation normalises,” JSW Energy had said in a BSE filing in May.
In another development, JSW Steel has informed the National Company Law Tribunal that it was only awaiting approval from the tribunal to implement its INR 1,550 crore resolution plan for Asian Colour Coated Ispat.
JSW said it is also in the possession of a commitment letter from the Deutsche Bank for an amount upto INR 1,650 crore for the said acquisition. JSW also cited a June 15 filing made by the company with the US Securities Exchange Commission in which, in relation to their ACCIL proposal.The NCLT was hearing a petition by the US-based Interups that, in a petition last month, had urged the NCLT to direct the resolution professional to allow it submit a resolution plan for the firm for which lenders had last year chosen a JSW Group company as the preferred bidder.
Interups had said that there is also no guarantee that the registrant will be able to arrange monies and the transaction will consummate. Interups had on June 12, 2020, expressed its willingness to bid which would meet the twin fold test of maximisation of value and viability and feasibility for ACCIL. It also sent a follow-up letter on July 8, but the RP denied accepting the offer, stating that the resolution process for the company was not yet over.
In the past 5-6 years, Sajjan Jindal JSW group acquired assets worth Rs 36,628 crore (excluding Bhuhan Power). JSW group, acquired several distressed assets in India including Jaypee Group’s Power Projects, and Monnet Ispat Steel Mill. The group flagship, JSW Steel had also won the race to buy Bhushan Power and Steel for Rs 19,700 crore.
The expansion of its steel production facilities at Vijaynagar, Karnataka is on track from 12 mtpa to 18 mtpa (million tonnes per annum) though the expansion at much smaller plant in Dolvi in Maharashtra has been delayed by six months.
After adding Bhushan Power’s capacity and its own capacity, the company’s total capacity will touch 30 mtpa as it spent almost half of its Rs 49,000 crore expansion capex in the last two years.The acquisition of BPSL is not part of Rs 49,000 crore expansion capex.
JSW’s rival, Tata Steel, which acquired Bhushan Steel for Rs 35,200 crore, will be focusing on expanding its capacity in Odisha to eight mtpa with an investment of Rs 23,500 crore. Similarly, the Tata group holding company, Tata Sons, is infusion funds in group companies to make sure that their expansion plans remain on track.
The Sajjan Jindal is eyeing on POSCO site in Odisha’s Jagatsinghpur close to Paradip Port.The JSW Steel, had won as many as 4 Big size Iron Ore –Manganese Blocks under Joda-Koira mining circles of Odisha’s mineral rich Keonjhar –Sundargarh regions, is expected to start its mining operations by July 1 this year.
Sources said the JSW Steel has got nod of Union Forest and Environment Ministry to produce 29 Million MT per annum from 4 blocks of Ganua Iron Ore, Jajang Iron Ore, Narayanposhi Iron and Manganese and Nuagaon Iron Ore. Company hoped that once the 4 blocks functions with full capacity, it is expected to produce around 36 Million MT per annum and meet about 70% of its requirements. At present, Sajjan’s JSW has only 15% own Iron Ore Resources.
JSW won 4 major blocks which earlier held by KJS Ahluwalia Group and Rungta Mines Ltd Group and has started operations– Nuagaon ,Narayanposhi ,Ganua and Jajang – with total ore reserve of 1,138.34 million tonnes. With the 4 Mines, an iron ore reserves linkage of more than 1,100 million tonnes has been secured for JSW Steel of Sajjan Jindal.
JSW Steel will have pay dues to Government for Nuagaon ,Narayanposhi,Ganua and Jajang blocks. Value of estimated reserves in INR Crores are as follows Nuagaon (Rs 1,85,683,47), Narayanposhi(Rs 42,571,12), Jajajng (Rs 5,511,44) and Ganua(Rs 24,982,79). This included 1% resource value, 0.5% affront payment and 0.5% performance security. For example, 1% security deposit for Nuagaon block will be around Rs 1856 Crore and NPV and stamp duty will be calculated extra.
