Tata Power exits its stake in Arutmin Coal
Mumbai/ Kolkata, Jan 31 : Tata Power, facing under-recovery challenges in its Mundra UMPP operations and cash flow concerns , has decided to exit from PT Arutmin Indonesia ("Arutmin") to get additional cash flow and to reduce its consolidated debt.
Considering the present coal price scenario, Arutmin, which is a mine spread over a number of pits in South Kalimantan, Indonesia, had started posing production and cost viability challenges in its operations.
Tata Power, however, continues to hold its equity stake in PT Kaltim Prima Coal ("KPC"), which owns one of the largest thermal coal producing mines in the world.
KPC will also continue to be a part of the supply chain for Tata Power Group's coal off-take requirements .
Accordingly, Tata Power, through its wholly-owned subsidiaries, has signed an agreement to sell its 30 percent stake in Arutmin and associated companies in coal trading and infrastructure, to a Bakrie Group entity.
The aggregate consideration for Tata Power's 30 percent stake is approximately USD 500 million, subject to certain closing adjustments.
The sale is subjected to certain conditions and restructuring actions, which the company targets to complete in the next three months.
Anil Sardana, Managing Director- Tata Power said, "The current coal price scenario has presented a challenge to the entire coal mining sector. The proceeds from the sale of Arutmin will provide cash to meet the Company's current challenges. We do not expect any impact on the coal supplies to our plants since we stay invested in KPC mines and our coal supply agreement continues as it is."
--IBNS (Posted on 01-02-2014)
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