Tata Power subsidiary to acquire stake in Prayagraj Power Generation Company

The company's JV Resurgent Power, through it's subsidiary Renascent Power, has agreed to acquire 75.01 per cent equity stake in Prayagraj Power Generation Company Limited (PPGCL). The deal is part of stressed asset resolution process initiated by PPGCL's lenders.

Resurgent Power Ventures Private Limited is joint venture between a group of global investors, Tata Power International Pte. Ltd (TPIPL, which is a 100 per cent subsidiary of Tata Power) and ICICI Bank Limited, formed to invest in the Indian power industry. TPIPL hold 26 per cent stake in Resurgent Power.

PPGCL, a Jaiprakash Associates promoted thermal power generation company, owns and operates a 1,980 MW super-critical power plant in Uttar Pradesh. The company owes close to Rs. 11,000 crore to lenders, who now hold controlling stake in PPGCL post a strategic debt restructuring (SDR) process through which loans were converted to equity.

This being a stressed asset sale, the share purchase agreement (SPA) was signed between Resurgent Power and the consortium of lenders led by SBI. Resurgent Power will acquire 75 per cent equity stake and 27 crore preference shares of face value Rs. 10 each of PPGCL. The deal is subject to regulatory approval from Competition Commission of India (CCI) and other authorities.

The cost of acquisition is approximately Rs. 6,000 crore which includes one-time payment to lenders on account of outstanding debt and value for equity shares and acquired preference shares, subject to the terms of the SPA.

Reacting to this development, at 10:01 hours, the stock of Tata Power was quoting Rs. 77.20 per share, down by 0.90 per cent, when the benchmark index BSE Sensex was at 35,154.37, up marginally by 12.38 points or 0.04 per cent on Thursday.