Billionaire Adani to Buy Lanco Power Plant for $1 Billion

Aug 14, 2014 3:17 am ET

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Aug. 14 (Bloomberg) -- Adani Power Ltd., the power generator controlled by Indian billionaire Gautam Adani, agreed to buy one of Lanco Infratech Ltd.’s thermal power plants in a deal valued at more than 60 billion rupees ($983 million).

Lanco, India’s second-biggest private power producer, will sell its 1,200 megawatt thermal power plant in Udupi along India’s southwestern coast and receive 20 billion rupees in cash, the New Delhi-based company said late yesterday. Adani will also take on 40 billion rupees of the power plant’s debt.

Lanco has been seeking to sell its assets after agreeing with banks last year to restructure debt that ballooned to 348 billion rupees in March, according to data compiled by Bloomberg. Three straight years of falling coal prices have soured its acquisitions in Australia and local bureaucratic gridlock has stalled construction and operation of new plants in India.

Lanco rose 4.7 percent, or by its daily limit, to 8.95 rupees and traded at 8.85 rupees as of 12:25 p.m. in Mumbai trading. Adani Power gained as much as 3.8 percent to 53.95 rupees. The benchmark S&P BSE Sensex rose 0.5 percent.

Lanco approved a debt restructuring proposal from its banks, according to a December exchange filing that didn’t include details of the plan. Its lenders include State Bank of India and ICICI Bank Ltd., according to Lanco’s latest annual report. Lanco’s debt has swelled more than fourfold since March 2010, data compiled by Bloomberg show.

Newcastle Price

Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, rose 0.8 percent to $68.85 a metric ton for the week ended Aug. 8, according to Bloomberg-compiled data. Prices slid 6.7 percent in 2013, the third year of declines.

Lanco is also considering selling its unprofitable Australian unit Griffin Coal Mining Co., people with knowledge of the matter said in January.

Adani Power had total revenues of 113 billion rupees in the year ended March, and operates three power plants in India with a total capacity of about 8,500 megawatts, according to its latest annual report. The wealth of billionaire Adani, who owns businesses ranging from power generation to ports and coal mining, has more than tripled to $6.7 billion as of today from $1.9 billion in September last year, according to the Bloomberg Billionaires Index.

--With assistance from George Smith Alexander and Abhishek Shanker in Mumbai.