Japan’s Orix to buy out IL&FS group’s wind assets

Industry:    May, 2019

Japan’s Orix Corp., which owns a 49% stake in each of the seven operating wind power plants of debt-laden IL&FS group, has expressed its intent to buy out the remaining 51% stake held by IL&FS Wind Energy Ltd (Iwel).

Orix will exercise its right under the terms of an existing pact with IL&FS (Infrastructure Leasing & Financial Services Ltd) wherein Orix can match the price offered by the highest bidder to buy Iwel’s stake in the wind power plants, IL&FS said in a release.

In April, state-run gas utility GAIL (India) Ltd had offered to pay 4,800 crore (as enterprise valuation) for the 874-megawatt (MW) wind portfolio, subject to Orix agreeing to the sale. Orix, however, has now decided to buy out the remaining 51% stake by matching GAIL’s offer.

The sale process to Orix is expected to be completed by June, subject to necessary approvals, according to the statement.

The IL&FS group had amassed a debt of more than 99,358 crore as of September 2018. Its default on debt payments caused a liquidity crisis in non-banking financial companies in India.

The completion of sale of special purpose vehicles to Orix will be subject to satisfaction of all compliances and approvals required under applicable laws—including approval of justice (retd.) D.K. Jain and the National Company Law Tribunal—in accordance with the proposed resolution framework, IL&FS said.

The sale proceeds, as and when realized by Iwel, shall be held in trust for distribution to the relevant stakeholders.

Another 104MW of under-construction wind power project, a solar power portfolio of 300MW and renewable energy EPC (engineering, procurement, construction) business will not be part of the deal. A spokesperson for IL&FS had said earlier that a separate sale process is on for the residual renewable energy businesses.

The government had in October 2018 replaced IL&FS’s previous management with an Uday Kotak-led board to oversee the company’s resolution process. IL&FS is implementing various asset monetization programmes to raise funds and repay debt.

The sale process for assets in areas such as education, funds, domestic roads, thermal power, water infrastructure, technology and key international assets is currently underway and binding financial bids are expected for these companies/businesses in stages by July 2019, the statement said.

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