Praveer Sinha, chief executive officer and managing director for Tata Power
said, “The sale of our shipping assets announced today is in line with our long-term plans to reduce debt and raise funds to invest in our future growth plans, including expanding our presence in the renewable energy business.”
He added, “The sale is also part of the restructuring within Tata Power to chalk out the road map for growth over the next decade.”
As part of the transaction, Tata Power will also enter into a long-term freight contract with Oldendorff Carriers.”The above transaction is expected to be concluded in the next three to four weeks, subject to necessary regulatory approvals,” the company said in its statement.
In its statement, Tata Power said, the turnover from the shipping business for FY20 was at $132 million, 3.1 per cent of its total consolidated turnover in the same year. Net worth of TERPL, the company said, was $205.23 million, or 7.4 per cent of total consolidated net worth in FY2020.
Tata Power will use the proceeds from the sale to reduce debt and create an asset-light model for its shipping business. “The objective of the transaction is to have an asset-light model for the shipping requirements of the company and the sale proceeds will be used towards reducing the debt as part of the overall restructuring plan of the company,” the company said in its press statement.
In April, Tata Power received $110 Million from sale of its stake in South African joint venture Cennergi, which is to be utilised to repay loans in the June Quarter.