JSPL to sell operations in Oman at $1 billion to pare debt

Naveen Jindal's Jindal Steel and Power Ltd on Tuesday said it is selling its operations in the middle east to Templar Investments Ltd for a deal valued at over $1 billion. The proceeds of the sale will go towards bringing down the overall debt of the company.

In 2010, JSPL had bought Shadeed Iron and Steel's 1.5 MTPA gas-based steel plant at Sohar Industrial Port area in 2010 for $500 million. In April 2014, the company had also successfully commissioned its 2 million tonnes per annum (MTPA). Further it had set up a 1.8 MTPA direct reduced iron plant.

The company said the divestment is in line with its vision and commitment to continuously bring down its debt and deleverage its balance sheet. The Oman plant itself has a debt of around $750 million. At an over all level, JSPL has a debt overhang of about Rs 32,000 crore. In fiscal 2019-20, it managed to reduce its net debt by Rs 4,379 crore.

"This sale is in-line with our vision to reduce debt and create a much healthier balance sheet for our investors and stakeholders. We firmly believe in the India growth story," said VR Sharma, MD, JSPL.

Alpen Capital, a Middle East-based investment bank, ran a sale process and received competitive offers from multiple interested bidders. CMS Cameron McKenna Nabarro Olswang LLP, Oman and Cyril Amarchand Mangaldas, India are the legal advisors for the transaction. The transaction is subject to approval from shareholders of JSPL and lenders of JSIS Oman among others. The company expects to close the deal in the next one month.

The company had been looking to sell the asset to consolidate its position in its home market ever since the domestic industry hit a trough around 2015. Brokerages have generally given a favourable rating to the company deleverage plans. Shares of the company gained 5.66 per cent to close at Rs 161.6 per share at the Bombay Stock Exchange on Tuesday. The stock has gained over 24 per cent this month.