Jindal Steel sells entire stake in Oman plant for over $1 billion

Jindal Steel & Power (Mauritius), or JSPML, a subsidiary of Naveen Jindal-led Jindal Steel and Power (JSPL) said on Tuesday that it has accepted a binding offer from Templar Investments to divest its entire stake in its Oman asset, Jindal Shadeed Iron and Steel (JSIS Oman).

The divestment is in line with JSPL’s vision and commitment to continuously bring down its debt and deleverage its balance sheet, the company said in a release.

The enterprise value of the deal is over $1 billion and Alpen Capital, a West Asia-based investment bank was appointed to run the sale process, which received competitive offers from multiple interested bidders.

As on 31 March 2020, the Oman plant had gross debt of Rs 5,619 crore, according to the company’s presentation. On a consolidated basis, JSPL had gross debt of Rs 36,825 crore and net debt of Rs 35,919 crore.

CMS Cameron McKenna Nabarro Olswang, Oman, and Cyril Amarchand Mangaldas, India, are the legal advisors for the transaction.

“This sale is in line with our vision to reduce debt and create a much healthier balance sheet for our investors and stakeholders. We firmly believe in the India growth story,” the release quoted V R Sharma, managing director at Delhi-based Jindal Steel, as saying.

The transaction is subject to approval from shareholders of JSPL and lenders of JSIS Oman, among others. JSPL expects the transaction to close in about a month, said the release.

Jindal Steel is not the only steel producer to make such a move to lower its debt. Among peers, Tata Steel is also looking to complete a transaction in Southeast Asia to generate cash, which could help lower debt.

Among other steel players, Sajjan Jindal-led JSW Steel continues to remain invested in the US as well as Italy. The company has a 6 million tonnes per annum integrated steel plant at Angul, Odisha, and largely caters to long products, which are utilised in construction and infrastructure. The company has also bagged orders from Indian Railways.  

The company has a coal gasification plant at Angul, where Direct Reduced Iron (DRI), also called sponge iron, is produced (in the form of lump, pellets or fines) by reducing gases produced from coal. It is the first plant of its kind in India and the second in the world.

Templar Investments, Mauritius is an investment company and part of the promoter group of JSPL.