Shares of Jindal Steel and Power (JSPL) rose over 1% on the Bombay Stock Exchange (BSE) in the early trade on Wednesday after industrialist Sajjan Jindal-led JSW Energy agreed to buy a 1,000 megawatt (MW) power plant in Chhattisgarh from his brother’s heavily indebted JSPL in a deal valued at up to Rs 4,000 crore.
JSW Energy also gained marginally in the early trade on Wednesday.
The value of the deal could rise to Rs 6,500 crore if the plant is completely secured for fuel and manages to enter into long-term power purchase agreements, the two companies said.
Naveen Jindal-led JSPL has been looking to monetise assets to generate cash flows and reduce debts.
JSPL had a consolidated debt of about Rs 46,000 crore as of December.
By agreeing to acquire the power plant, JSW Energy is moving a step forward in its vision of becoming a leading private sector power company in India, and fits in its bullish outlook on the energy business in the country, the company said in a statement.
Post acquisition, the aggregate installed and operational power generation capacity of JSW Energy will rise to 5,531 MW and diversify its presence in eastern India and Chhattisgarh , a state rich in coal reserves.
The transaction, which is expected to be completed on or before June 30, 2018, is structured to be value accretive to shareholders immediately upon consummation, JSW Energy statement said.
At 9:45 am, JSW Energy shares were trading up 0.2% at Rs 66.75, while JSPL was up 0.1% at Rs 69.05.