DLF has signed a definitive sale agreement for its 150MW wind power units in Gujarat to Bharat Light & Power. The deal is valued at an enterprise value of ~Rs 4.9 billion, of which Rs 2.8 billion would be a lump sum consideration and the balance would be transfer of debt.
The company expects to receive the consideration in Q4FY13 end or early Q1FY14, post regulatory approvals. DLF (Q,N,C,F)* has further 77MW in 3 states across India up for sale and is in advanced stages of negotiations.
”The deal is line with the company’s FY13-divestment guidance. While news flows had earlier indicated the deal would go through at a higher amount of ~Rs 9 billion, the consummation of the transaction is positive for the stock. We value DLF’s wind power business at Rs 8.5 billion (8X EV to FY14E EBITDA of Rs 1.05 billion)” said Edelweiss.
Edelweiss believes that this deal to be a positive one as DLF is currently saddled with a huge debt of Rs 212 billion. Consummation of the wind power sale along with Aman resorts sale would contribute Rs 21 billion towards debt reduction.
The closure of the deal would bring total divestments in FY13 to ~Rs 52.4 billion as against its guidance of ~Rs 50 billion for FY13. Further divestment in the balance wind power units, which are at advance stages of negotiations, is expected to generate another ~Rs 2.5 billion for the company.