Naveen Jindal-owned Jindal Steel and Power Ltd or JSPL is all set to sell its 1,000 MW power plant in Chhattisgarh to brother Sajjan Jindal's company JSW Energy Ltd. The deal is valued at Rs. 6,000 crore.
The deal reportedly involves takeover of debt and the transaction is expected to be finalised on Wednesday during a board meeting, the Economic Times reports.
The JSPL stock rose sharply following the news of the acquisition and was trading at Rs. 78.30 at around 10.34 a.m. on Wednesday, up 5.38 percent from its previous close on the Bombay Stock Exchange. Whereas, the stock of JSW Energy was trading at Rs. 68.55, around the same time, up 0.51 percent from its previous close.
"Both boards are likely to clear the proposal tomorrow along with the quarterly numbers following which a binding agreement will get inked. The valuation is expected to be between Rs. 6,000 crore and Rs. 6,500 crore," a source was quoted as saying by ET on Tuesday.
As part of the deal, JSW Energy may buy the power unit only in March 2018, it will pay JSPL Rs.500 crore upfront so that the company can recover some debt. However, the rest of the deal amount will be paid later, Moneycontrol reports.
Last month, the two companies signed an agreement, whereas the terms and conditions of a shareholders' agreement was inked a few days ago. Like its other competitors, JSPL's finances have been severely impacted due to rising cheap imports from China, Russia and South Korea.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]
