IL&FS Proposes to NCLT Sale of Wind Assets to Orix

ILFS group has proposed to NCLT the sale of its wind energy assets to Japan’s Orix Corporation, reducing the debt of the company by Rs 4,800 crore.

Embattled IL&FS group has proposed to the National Company Law Tribunal (NCLT) the sale of its wind energy business to Japan’s Orix Corporation which will help reduce the debt of the company by Rs 4,800 crore.

Infrastructure Leasing and Financial Services (IL&FS) said in a statement it has filed the proposal to complete the sale of its wind energy business, held under IL&FS Wind Energy Limited (IWEL) to Orix Corporation of Japan, with NCLT for final approval. 

The proposal has been filed before the Tribunal after completing binding Share Purchase Agreement with Orix Corporation and obtaining “in-principle” approval from all lenders for completing this transaction, subject to NCLT approval. 

IL&FS said it had already received approval for the sale of its wind energy business from Justice (Retd) D K Jain, appointed by the NCLAT to supervise the operation of Resolution Process of IL&FS group companies, earlier last month. 

Justice Jain had approved the sale on the conditions that the proposal will be placed before the NCLT for its approval and the bid amount realised from the sale be kept in an escrow account. 

This amount in the escrow account will only to be disbursed in accordance with the directions in the proceedings, pending before NCLT/NCLAT, as applicable. 

ORIX Corporation of Japan, owner of 49 percent stake in each of seven operating wind power plants of the IL&FS Group, had expressed its intent to buy out the remaining 51 percent stake held by IL&FS Wind Energy Limited (IWEL). 

This intent to buy 51 percent stake was in the exercise of Orix’s right under the terms of an existing MoU wherein ORIX can match the price offered by the highest bidder for purchasing IWEL’s stake in the wind Special Purpose Vehicle (SPVs).

Orix Corporation decided to match the offer of the highest bidder, of approximately Rs 4,800 crore for 100 percent of enterprise value, contemplating no haircut to the debt of the SPVs aggregating to around Rs 3,700 crore. 

Some of the major lenders in the SPVs include the Power Finance Corporation, Bank of Baroda (for working capital and project financing), and India Infra Debt Limited – with debt aggregating to approximately Rs 3,700 crore (without interest).

The sale to ORIX will lead to resolution of the following seven companies of the IL&FS Group – Lalpur Wind Energy Private Limited, Etesian Urja Limited, Khandke Wind Energy Private Limited, Retadi Wind Power Limited, Wind Urja India Private Limited, Tadas Wind Energy Private Limited and Kaze Energy Limited. 

The board of IL&FS has already approved the sale of these entities to Orix Corporation in its board meeting held on June 28, 2019.