Olympus/Tata Power Indonesian coal deal nixed

The $300m agreement for Olympus Capital to buy stakes in two special purpose vehicle held by Tata Power has fallen by the wayside after the PE firm failed to meet pre-requisites set in a June 2010 agreement.

The agreement between Olympus Capital and Tata Power that would have seen the private equity firm acquire $300 million worth of shares in two coal-focused Indonesian special purpose vehicles (SPVs) has fallen through, according to a notice submitted to the National Stock Exchange of India.

According to the notice, NSE-listed Tata called off the deal after Olympus did not fulfill certain conditions specified in the investment agreement on time.

It is unclear whether there will be renegotiations as Olympus Capital declined to comment and Tata did not comment by press time.

The deal, which was initially inked in June last year, had entailed Tata Power issuing shares in Bhira Investments Limited and Bhivpuri Investments Limited Coal special purpose vehicles to Olympus Capital. Tata Power would have used the capital raised from the sale to expand and/or pay off debts, the company said.

Tata Power acquired 30 percent stakes in two Indonesian coal assets in June 2007 for about $1.22 billion. The company funded the purchase via a $950 bridge loan (renamed Bhivpuri Investments), a $273 million shareholder loan (renamed Bhira Investments) and an additional $1 million equity each in Bhivpuri and Bhira. 

Olympus had formerly held stakes in the Indonesian coal assets that Tata Power holds in its coal SPVs, Daniel Mintz founding managing director of Olympus Capital said in a previous statement.

Olympus Capital would have made the transaction from Olympus Capital Asia III, which closed on $750 million in June 2009 and is focused on mid-market private equity and special situations in the region.

Tata Power is India’s largest integrated private power production utility. The company has an installed generation capacity of about 3,000 MW and has a presence in thermal, hydro, solar and wind power generation, transmission and distribution. According to the company’s projection, its thermal power stations are expected to require between 23 and 25 million tonnes of coal per annum by 2015, up from three million tonnes in 2009