Friday, 3rd September holds all the promise of being tumultuous for Naveen Jindal. And rightly so…it has to be!
The proxy shareholders have woken up and they will be creating a ruckus, hopefully. They have raised concerns and we most certainly hope that this 'round-tripping' deal does not get off the ground.
3rd Sept is the EGM and the JIndals are seeking shareholder approval for selling JSPL’s entire 96.42% stake held in Jindal Power Ltd (JPL) for Rs.7401 crore. Who is buying it? Worldone – a private firm owned by Naveen Jindal and his family, who in turn are the promoters of JSPL. Errr… JSPL stake is being sold by the promoters to the very same promoters??
So, Worldone will buy out all the equity shares and redeemable preference shares of JPL held by JSPL for a total consideration of approximately Rs.7,401 crore, of which Rs.3,015 crore will be payable by cash and the remaining approximately Rs.4,386 crore will be by way of assumption and takeover of liabilities and obligations of JSPL in relation to inter-corporate deposits and the capital advances extended by JPL to JSPL. The objective of this ‘deal’ – debt reduction.
And to top it all off, this is a ‘revised’ offer and was done to keep intact the valuation and transparency!!! The bidding process was designed in such a way that, in such a transparent way that Worldone would have always emerged as the ‘winner’.
Take a look at our Editor, Mr.SP Tulsian’s take on this so-called divestment.
He said, “Apart from all this, JPL has lent an ICD of Rs. 1,532 crore to JSPL. JPL has also given an advances of Rs. 2,854 crore, for purcahse of captive power plant of JSPL at Angul, Odisha. The Acquirer of JPL, wants this Rs. 4,386 cr, (ICD & Capital Advance) to be converted in loan. This means Group company, being Acquirer of JPL will pay Rs. 3,015 cr to JSPL and will get funding of Rs. 4,386 cr as loan. What a novel way of financing and fooling the minority shareholders!”
Mr.Tulsian, adds, “ Even Vision 2.0 of JSPL will not make it debt free, because, now this amount of Rs. 4,386 cr will be owned by the Acquirer and not by JSPL. Though debt of JPL will get reduced from JSPL, but that quantum is not known.”
The promoters of this group have done this time and again; this ‘round-tripping’ is not the first time. Earlier too, always using the pretext of ‘debt reduction’ the promoters have ‘sold’ companies like Jindal Shaheed Iron & Steel and also its Oman business – once again to the promoters only.
This is neither a transparent deal nor is the valuation right – the proxy advisory firms are unanimous in their opinion that this being sold to the promoters under distress sale valuation when there is really no need to do this at all.
This entire effort is being orchestrated to give this valuable company to the promoters at a throwaway price.
Hope the minority shareholders vote with their eyes wide open…..