- No dealings with original promoters until this transaction
- In line with Essar’s power sector strategy
- Invested more than Rs 500 crore after acquisition
Mumbai, September 05, 2012:
- Essar Power Ltd., an Indian company, acquired 100% of the equity of Navabharat Power Pvt. Ltd. in two tranches in July 2010 and April 2011 for a total consideration of around Rs 230 crores.
- The entire acquisition was carried out in a transparent manner with independent financial and legal advisors assisting the company in the process of acquisition.
- Essar Power categorically denies allegations which have been voiced in certain media reports based on unidentified sources that Navabharat was a ‘front’ company of Essar.
- Following the acquisition, Essar Power has invested more than Rs 500 crores in developing the project and has also achieved financial closure, with ICICI Bank having underwritten debt financing of more than Rs 3720 crores. The project is currently awaiting certain government approvals.
- Navabharat Power, promoted by the Hyderabad-based businessman P. Trivikram Prasad and ex CEO of Lanco Power, Mr Y Harish Chandra Prasad, had been allotted a coal block in January 2008, three years before the acquisition by Essar was concluded. The company has signed an MOU with Government of Orissa for developing the mega power project in June 2006.
- Essar has had no dealings with either of the original promoters until this transaction.
- The acquisition of Navabharat Power was in line with the company’s publicly stated strategy of growing its power generation business through both organic and inorganic means and was fully disclosed to all relevant statutory authorities.
- The transaction was negotiated over several months with the original promoters of Navabharat Power Pvt Ltd and was concluded after satisfactory completion of legal due diligence by J. Sagar & Associates and financial due diligence by Ernst & Young.
- The total agreed consideration was split between the promoters (who also held direct stake in Navabharat Power) and 100 per cent promoter owned companies, as per the agreements.
- This transaction was disclosed, as required by the regulations, in the prospectus issued by Essar Energy plc in April 2010, the ultimate parent company of Essar Power Ltd., India. Investors have been kept updated about the progress through various communication made by Essar from time to time.
- Essar Power was approached by a prominent Indian financial institution in 2009 to consider a potential transaction to acquire Navabharat Power. As an established player in the power sector, Essar Power was at the time scouting for opportunities to expand its business through both organic and non organic route.
- Discussions with the merchant banker and the erstwhile promoters revealed that the power project of Navabharat had made substantial progress with most of the key regulatory approvals in place. In comparison to a greenfield venture, Essar Power expected to save more than 2 years time in completing the project and accordingly went forward with the acquisition.
About Essar Energy
Essar Energy (LSE:ESSR) is a world class, low-cost, integrated energy company with an established track record.
Essar Energy, through its subsidiaries, owns one of India's largest private power producers now with 2,800MW of installed capacity and projects under construction to expand its capacity to 9,670MW.
Essar Energy, through its subsidiaries, owns one of India's fastest growing private sector oil and gas companies with a diverse portfolio of exploration and production assets. The Vadinar refinery, located in Gujarat, is India's second largest private sector oil refinery with throughput capacity of 20 million metric tonnes per annum, or 405,000 barrels per day following the completion in 2012 of expansion and optimisation projects.
Essar is a global conglomerate and a leading player in the sectors of Steel, Energy (Oil & Gas and Power), Infrastructure (Ports, Projects & Concessions) and Services (Shipping, Telecom, Realty and Business Process Outsourcing). With operations in more than 25 countries across five continents, the group employs 75,000 people and has revenues of over US$ 27 billion.
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