The country's largest private power producer Tata Power today sold 14-15 per cent stake in its two coal SPVs to the private equity firm Olympus Capital Holdings Asia for a consideration of Rs 1,350 crore.
Tata Power would raise the amount through issue of shares having differential rights to Olympus Capital, and would be used to fund overseas acquisitions or reduce its outstanding debts, the company said in a statement. The shares would be allotted through its two coal special purpose vehicles--Bhira Investments and Bhivpuri Investments.
These two coal SPVs together hold 30 per cent stake in Tata Power's two Indonesian coal mines--KPC and Arutmin.
Taking current position of debt and cash in the coal SPVs, shareholding of Olympus Capital may be in the range of 14-15 per cent for the investment of Rs 1,350 crore, the statement said. These class B shares are fully convertible into ordinary shares through the end of the fifth year from the date of closing at the option of the holders. The capital protection arrangement could be serviced either from Tata Power or the coal SPVs, it said.
According to the statement, the funds could be utilised to secure further long-term coal supplies by investing in coal mines or to reduce the outstanding debt in the SPVs.
Differential shares do not carry any voting rights. The holders of these shares are also not entitled for any dividend for five years from the date of transaction closure.
More From This Section
Recently, Tata Power announced that the company was looking for coal mines in Indonesia or Australia to fuel its future power projects.
"This long-term, flexible financing enhances our ability to achieve our strategic goals of securing sustainable sources of supply for our rapidly growing power generation base," Tata Power Managing Director Prasad Menon said.
In June 2007, Tata Power had acquired 30 per cent stake in Indonesian coal mines, KPC and Arutmin for $1,225 million. It was funded through a bridge loan of $950 million borrowed by Tata Power Cyprus which is now re-named Bhivpuri Investments, fully guaranteed by Tata Power.
The company had given $273 million as shareholder loan to Tata Power Mauritius which is re-christened Bhira Investments with $1 million equity in Bhivpuri and Bhira each. The bridge loan was subsequently refinanced and the current outstanding debt is $335 million as non-recourse and $340 million as recourse debt.
Olympus Capital Holdings Asia is an independent middle market private equity firm set up in 1997 with offices in Hong Kong, New Delhi, New York, Seoul, Shanghai and Tokyo. Olympus Capital’s investment portfolio in the country includes Orient Green Power of Shriram EPC and Quatrro BPO Solutions led by Raman Roy.