Solar asset sale to KKR to accelerate pace of debt reduction: Shapoorji Palonji2 min read . Updated: 29 Apr 2020, 11:12 AM IST
- Over the last six months, the Group had reduced its debt by over ₹600 crore
- With the consummation of this deal, SP Group debt is expected to further reduce its debt by over ₹1,000 crore
Mumbai: The recent sale of 317 megawatts of solar assets to private equity firm KKR will accelerate Shapoorji Pallonji Group's debt repayment efforts, said a group of spokesperson in an email statement to Mint.
On Monday, the group said it is selling five solar projects in Maharashtra and Tamil Nadu to KKR for a consideration of ₹1,554 crore. The transaction marked a significant asset monetization for the group, as part of larger effort to deleverage its stretched balance sheet.
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"This deal is expected to accelerate the pace of debt reduction at the SP Group. The proceeds of this sale will be primarily applied by the group towards debt reduction and a part will also be utilized for funding the group’s under construction solar projects," the group said.
"Over the last six months, the Group had reduced its debt by over Rs600 crore. With the consummation of this deal, SP Group debt is expected to further reduce (debt) by over ₹1,000 crore," the spokesperson added.
According to a November report by rating agency ICRA, the group's flagship company Shapoorji Pallonji and Company Pvt. Ltd's standalone debt stood at ₹9,019 crore as of 30 September.
The sale of the solar assets has been received well by investors. Shares of Sterling & Wilson Solar Ltd, the group's solar EPC company, have hit the upper circuit of 5% in the last three consecutive trading sessions. At 10.30 AM on Wednesday, the stock was trading at ₹174.35 apiece, on the BSE. The group owes over ₹1,000 crore in debt obligations to Sterling & Wilson Solar, which is to be paid by the end of September.
"During FY20, despite tight market conditions, various SP Group companies managed to lock in asset monetizations worth over Rs4,200 crore," the Shapoorji spokesperson said.
"The Group’s strategy to unlock value from it’s extensive, high quality asset base, improve profitability and free cash flow from all ongoing operational businesses and continually strengthen the balance sheet, will be relentlessly and unwaveringly pursued during FY21 and beyond," he added.
Mint reported last month that the group was in talks with lenders to raise up to $1 billion by pledging its stake in Tata Sons Pvt. Ltd, the holding company of the Tata Group. Shapoorji holds 18.2% stake in Tata Sons.
The group has also put up other assets on sale, including its roads business and the water purifier and vacuum cleaner business Eureka Forbes.