Tata Power to sell shares in KPC, related firms
Saturday, July 5 2014 - 02:19 AM WIB
India?s Tata Power, facing under-recovery and cash flow challenges, said it has signed option agreements to sell 5 percent stake in East Kalimantan-based coal miner PT Kaltim Prima Coal (KPC) to get additional cash flow as well as to reduce its consolidated debt.
In addition, the entire 30 percent stake in KPC related Power Infrastructure Companies is also covered for sale in the above agreements, the company said in a statement Friday.
Tata Power, however, would continue to hold 25 percent equity stake in KPC, a subsidiary of IDX-listed coal giant PT Bumi Resources Tbk, if the option is exercised. KPC will also continue to be a part of the supply chain for Tata Power Group's coal off-take requirements, the statement added.
The aggregate consideration for Tata Power's 5 percent stake is US$250 million, subject to certain adjustments.
Accordingly, Tata Power, through its wholly owned subsidiaries, has signed an option agreement which gives it the option to sell 5 percent equity stake in KPC and associated companies in coal trading, to a Bakrie Group entity.
Tata Power, through its wholly owned subsidiaries, has also signed an option agreement which gives it the option to sell its 30 percent equity stake in the Power Infrastructure Companies which are associated with KPC, to the same Bakrie Group entity.
The above options will vest based on certain conditions being fulfilled. The aggregate consideration will be determined once the option is exercised and will be based on the valuation methodology agreed with the buyer.
Anil Sardana, Managing Director of Tata Power stated, "The option to partially sell KPC and its related power company has the potential to provide the company the flexibility to raise additional funds to meet the current challenges. If the option is exercised, there will be no impact on the coal supplies to our plants since we will stay invested in KPC mines to the extent of 25 percent and our coal supply agreement will continue as it is. There will also not be any dilution of our rights under the KPC 5 percent sale.
Editing by Reiner Simanjuntak