JSW Energy Ltd., based in Mumbai, India, is refinancing about US$1.1 billion via a 5:25 financial structure for its hydropower-related debt following the purchase of two hydroelectric projects in November 2014 from Jaiprakash Power Ventures Ltd.
Negotiations between lenders, oversight from the state-owned Reserve Bank of India and JSW Energy are expected to lead to a final agreement later this month that must then receive approval from the courts, according to published reports.
JSW Energy purchased 1,091-MW Karcham Wangtoo and 300-MW Baspa Stage II hydroelectric projects, in Himachal Pradesh for an estimated $1.8 billion. It transferred both projects to Himachal Baspa Power Co., a special purpose vehicle in which JSW Energy has a 100% stake.
In using a 5:25 financial structure, lenders can assign lengthy amortization schedules for loans to court approved infrastructure projects. In this specific case, the amortization period is 25 years, with the time being based on the projects’ estimated economic life. Also, if certain criteria are met, such as continued project viability and the installation of new project managers, refinancing would be allowed every 5 years.
According JSW Energy, as of June 30, its net debt was $1.3 billion and its current market capitalization stands at $2.1 billion.