The deal is expected to fetch $250 million
Tata Power, on Friday, said it would sell its 5 per cent stake in PT Kaltim Prima Coal for about $250 million to cut its debt, less than six months after offloading its holding in another Indonesian coal company PT Arutmin.
“Tata Power, facing under recovery and cash flow challenges due to its Mundra UMPP operations has signed options agreements to sell 5 per cent stake in PT Kaltim Prima Coal to get additional cash as well as to reduce its consolidated debt,” the company said in a BSE filing.
The company will sell its stake to Indonesian coal firm Bakrie Group entity.
Post-stake sale, Tata Power’s stake PT Kaltim Prima Coal (KPC) will be 25 per cent.
As part of the deal, Tata Power through its subsidiaries has the option to sell 30 per cent stake in power infrastructure companies, which are associated with PT Kaltim Prima Coal, to the Bakrie Group entity.
“The aggregate consideration for Tata Power’s 5 per cent stake is $250 million, subject to certain adjustments,” the filing said.
“The option to partially sell KPC and its related power company has the potential to provide the company the flexibility raise additional funds to meet the current challenges,” Anil Sardana, Managing Director, Tata Power, said in the statement.
On January 31, Tata Power announced the sale of its 30 per cent stake in Indonesian coal company PT Arutmin for $500 million.
The company signed an agreement to sell its 30 per cent stake in Arutmin and associated companies in coal trading and infrastructure to a Bakrie group entity.
Tata Power’s 4,000 MW ultra mega power project at Mundra in Gujarat continues to face trouble due to increase in the price of Indonesian coal.
It had approached the electricity regulator CERC seeking higher tariff for the Mundra project.
The Central Electricity Regulatory Commission (CERC) had said that since there had been a rise in the price of imported coal from Indonesia the private power utility should be compensated.
A panel set up by the regulator reportedly suggested nearly 50 paise hike in tariff of the Mundra plant.