Tata Power to raise $300 million through coal SPVs

Tata Power, India's largest private power player has signed an agreement to raise $300 million in Bhira Investments Limited and Bhivpuri Investments Limited coal Special Purpose Vehicles (SPVs) through shares with differential rights to be issued to Olympus Capital Holdings Asia (Olympus Capital).

Tata Power holds its interest in the KPC and Arutmin coal mines in Indonesia through these SPVs.

Taking current position of debt and cash in coal SPVs, the post money shareholding of Olympus Capital may be in the range of 14-15 per cent for an investment of $300 million.

The investment is subject to certain regulatory and lender approvals. The instrument will be in the form of differential rights (Class B) shares with no dividend rights which are the subject of a capital protection arrangement at the end of five years from the date of closing the transaction, unless converted. These Class B shares are fully convertible into ordinary shares through the end of the fifth year from the date of closing at the option of the holders of the Class B shares. The capital protection arrangement could be serviced either from Tata Power or the coal SPVs.

These funds could also be utilised to secure further long term coal supplies by investing in coal mines or to reduce the outstanding debt in the SPVs.

Prasad Menon, managing director, Tata Power said, "We are excited about this strategic partnership with Olympus Capital which we hope to expand into other areas of common interest given their on-the-ground presence throughout Asia and expertise in the energy and power sector   This long term, flexible financing enhances our ability to achieve our strategic goals of securing sustainable sources of supply for our rapidly growing power generation base.''