Source:
NDTV Profit (6 Apr 2010): http://bit.ly/colEwl
Domain-b.com (7 Apr 2010): http://bit.ly/aeKL42
Jindal Power has achieved financial closure for its Rs. 13,410 crore expansion project of an existing 1000 MW thermal power plant to 2400 MW capacity at Tanmar in Raigarh district of Chhatisgarh. The execution of the loan agreements was concluded on the 26th March, 2010.
The total project project cost of Rs. 13,410 crore is financed on a Debt-Equity ratio of 3:1, with an RTL of Rs. 10,057 crore and Equity/Internal Accruals of Rs. 3353 crore. A 23 member consortium has sanctioned the loan at a average rate of 10.50% under what they are calling a 'unique two-tranche structure to meet the requirements of Jindal Power and the lenders'. SBI Capital Markets was the sole adviser and arranger of the deal. JM Financial, Enam Securities, Deutsche Equities, Goldman Sachs, ICICI Securities, UBS Securities and SBI Capital Markets were the lead managers for the issue.
Quoting a press release: "Under the financing arrangement, SBI Capital Markets has framed a two-tranche structure to meet the requirements of both Jindal Power and lenders. The blend of project finance and conventional debt financing has helped both parties to arrive at an optimal risk allocation structure. While the structure gives Jindal Power more flexibility in its other borrowing programmes by isolating project risk, lenders derive comfort from the company’s balance sheet".
Sounds to me like an SPV arrangement funded by a term loan, and perhaps a slice of debt to Jindal Power, injected into the SPV as equity. This allows Jindal Power to keep most of the debt off its financials, while retaining some of it on its own balance sheet to reduce the overall risk attached to the entire debt component. The last part is pure conjecture, any additional information/correction is more than welcome!
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