Khopoli Investments Ltd. (a 100% subsidiary of Tata Power, "the Company") today announced the execution of a Share Purchase Agreement with Exxaro Resources Ltd. for the divestment of the Company's entire 50% stake in Cennergi, a South African joint venture, for an amount of ZAR 1,550 million (USD 106 million}, subject to normal working capital and other adjustments.
The agreement will be subject to, amongst others, normal regulatory approvals customary for this type of transaction. Cennergi (Pty) Ltd. is a 50:50 joint venture between Exxaro Resources Ltd. and Khopoli Investments Ltd., a wholly owned subsidiary of The Tata Power Company Ltd. Exxaro is a leading South African coal producer.
Under the Agreement, Exxaro will acquire the entire 50% shareholding of Khopoli Investments Ltd. The Agreement is likely to be completed by Q3FY20. Post this transaction, Exxaro will have 100% ownership of Cennergi.
Cennergi in turn owns two wind farms in South Africa - Amakhala Emoyeni (with a generation capacity of 134.4 MW and 95% shareholding) and Tsitsikamma Community Wind Farm (with a generation capacity of 95.3 MW and 75% shareholding). Each project has a 20-year Power Purchase Agreement (PPA) with the State power utility Eskom.
"The decision to monetise this South African asset is in alignment with our stated strategy to deleverage the Balance Sheet by divesting sub-optimal size international assets," said Mr Praveer Sinha, CEO & Managing Director, Tata Power. "The proceeds from such sale would be re-invested in emerging areas where there is a huge growth opportunity. The Company will focus on renewable power, power distribution and service-led businesses in India which will bring in greater value and help us align with the emerging consumer needs", he added.
ABSA Bank was the sole advisor to Khopoli for the transaction.
"The collaboration between Exxaro and Tata Power over the past seven years to develop these projects to their current status has been commendable and an outstanding success in South Africa's implementation of its energy strategy. As a South African-based company, Exxaro is pleased with this opportunity to consolidate its interest in this renewable energy asset at a time in South Africa where we need energy security as we respond to increasing negative sentiment towards coal-based electricity generation," said Mr Mxolisi Mgojo, CEO of Exxaro Resources.
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