In 2nd asset sale wthin a month, Essel Group sells solar power

As a part of its efforts to significantly deleverage its bloated balance-sheet, the Essel Group Thursday signed a definitive agreement with Adani Transmission to sell its 205 mw of operating solar assets for an enterprise value of Rs 1,300 crore. The sale, second in a month, will help the debt-laden diversified Essel Group to further pare its debt from the present Rs 6,776 crore. The Subash Chandra-run group had last month sold 11 percent to the US fund Oppenheimer for Rs 4,224 crore, helping it trim debt from Rs 11,000 crore as of the June quarter.

Essel Group's two subsidiaries--Essel Green Energy and Essel Infraprojects--which together own a portfolio of 205 mw of solar assets, have signed the agreement with Adani Transmission-owned Adani Green Energy to sell 100 percent equity in 10 operating companies for an enterprise valuation of Rs 1,300 crore, Essel group said in a statement. The all-cash deal is expected to be completed mid- October, Adani Green said.

For the Adani Group, which has been on an acquisition spree for long now, the deal will boost their operational solar portfolio to 2,353 mw from 2,148 mw now and 475 mw under-construction. Adani Green is one of the largest renewable power generation companies with a total portfolio of 5,290 mw, of which 2,320 mw is operational across 11 states and 2,970 mw under-construction and will be ready over the next two years.

These 10 companies have a combined capacity of 205 mw spread across Karnataka, UP and Punjab, having long term PPAs with the respective state electricity distribution companies which have the remaining life of 22 years. The 10 firms are Essel Bagalkot Solar Energy, Essel Gulbarga Solar Power, Essel Urja, KN Bijapura Solar Energy, KN Indi Vijayapura Solar Energy, KN Muddebihal Solar Energy, KN Sindagi Solar Energy, PN Clean Energy, PN Renewable Energy and TN Urja.

Commenting on the sale, the Essel Group said, "our asset divestment process is well within the purview of the agreed timelines with our esteemed lenders and the sale of the solar assets to Adani Green, is yet another positive step taken in this direction." "This deal, which is the first brownfield acquisition of operating assets by the company, will strengthens its position as one of the premier renewable power producers, with a total portfolio of 5.5 gw, of which 2.5 GW gw are operational," Adani Green chief executive Jayant Parimal said in a statement. "We remain focused on opportunities that help us create value for shareholders, as well as facilitate the growth of environment-friendly green power," he added.

It can be noted that after a massive run on the Essel group shares in January, the group had in early February entered into a standstill agreement with the lenders, under which it was given a time till end September to deleverage. Since then it has nearly halved its debt levels, including the proceeds from this deal.

The Essel Group said the company has maintained a constant process of identifying the right potential partner for the sale of the infra assets. "We remain focused towards our commitment made to the lenders and are confident to complete the overall repayment process," it added.

Essel is also constantly working towards arriving at a closure on the divestment of the additional 480 mw solar assets portfolio, the company added. On July 31, the debt-ridden group had signed a pact to sell 11 percent in its flagship Zee Entertainment Enterprises for Rs 4,224 crore to the US-based PE major Invesco Oppenheimer to pay off debts before a September deadline.

While the Essel Group had an overall debt of around Rs 16,000 crore as of March 2109, around Rs 11,000 crore of this was raised from mutual funds and non-banking entities by pledging promoter shares across group firms, including ZEEL, needs to be settled by September 30, according to the standstill agreement reached with creditors in February. The media group has asserted that it will be able to complete the sale of non-media assets within the next two months to raise the rest of the cash required.

While the Zee Entertainment counter lost 0.5 percent on the BSE at Rs 362.40, Adani Green closed 2.25 percent at Rs 43.35 against the benchmark plunging over 1.02 percent Thursday in a massive sell-off..