Sajjan Jindal’s JSW EnergyNSE 0.85 % has promised lenders that it would sweeten the offer for Pragyaraj Power in an attempt to trump Tatas backed Resurgent Power, but hasn’t specified what the betterment would be, said two people familiar with the matter.
This marks yet another bankrupt asset that’s drawing competing higher bids in more than one round from competing buyers deriving better value for assets and improve the recovery ratio for lenders. Earlier, Resurgent, a joint venture between Tatas and ICICI Venture, upped the bid to be more attractive than JSW Energy.
In a letter sent to lenders late on Thursday, JSW Energy, one of the few sound private sector power producers, the company said it was open to make an offer that would be attractive for lenders and that it needed an opportunity to do so.
Resurgent Power appeared to be the best bidder on Wednesday with an upfront cash payment of Rs 6,000 crore for the 1,980 mega watt Prayagraj Power and 15% equity for the lenders. While JSW Energy’s offer involved 15% equity to lenders, the payments worked out to Rs 3,740 crore since it was laced with conditions. Prayagraj Power, a thermal unit located in Uttar Pradesh near Allahabad, has outstanding loans of Rs 11,000 crore and lenders own 89% stake in the company.
JSW Energy’s original offer was at Rs 5940 crore with a clause that they would not be liable to pay any tax over dues of the bankrupt firm. A report by consulting firm PricewaterhouseCoopers said that tax liability could be as high as Rs 2200 crore and effectively JSW Energy offer amounted to Rs 3740 crore.
In a letter to lenders, JSW said “we wish you had given us an opportunity to discuss the terms offered by Resurgent Power and the parameters on the basis you are entertaining such unsolicited offer. We are more than pleased to address your concerns and better our offer.”
The company has also indicated that they are open to offer higher upfront cash amount and absorb tax liabilities. Although lenders have already issued a letter of intent to Resurgent Power, they might not be averse to consider JSW offer it something is concrete in it, said one of the two people cited above.
Prayagraj Power is one of the seven power accounts identified by lenders where they see a possibility of resolution outside the bankruptcy court. Banks are running against time after the Reserve Bank of India mandated them to resolve all distressed assets above Rs 2000 crore or refer them to bankruptcy court by early next week.
The Tata Group and JSW Energy are also in the race to acquire Bhushan Power & Steel, where JSW Steel improved its offer by 60% after lenders declared the Tatas as the highest bidder.
Source: Economic Times