Singapore-based Trust Energy Resources Pte Ltd (TERPL), a wholly-owned subsidiary of the Tata Power Co. Ltd (TPCL) announced on Tuesday the completion of the sale of its three ships MV Trust Agility, MV Trust Integrity and MV Trust Amity to Oldendorff Carriers GmbH & Co. KG, Germany for a consideration of USD 212.76 million.
TERPL will now cater to the shipping requirements of the company’s imported coal-based Coastal Gujarat Power Ltd (CGPL) plant at Mundra under an asset-light model, which will help unlock significant value and returns for shareholders. The sale proceeds will be used towards reducing the company’s debt as well as to fund future growth plans.
Praveer Sinha, CEO & Managing Director, Tata Power said, “The sale of our shipping assets 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.”
The sale includes existing long-term contracts associated with the ships with M/s. Oldendorff Carriers GmbH & Co. KG Germany, which is one of the largest dry-bulk shipping companies in the world. Each year, Oldendorff carries about 320 million tons (MT) of bulk and unitised cargo around the world and performs 14,000 port calls in 125 countries. On average, Oldendorff operates 700 chartered and owned ships at any one time.
This is the second asset sale by Tata Power in recent months after the divestment in Cennergi in South Africa.
The company is reportedly working on a strategic turnaround plan to strengthen its fundamentals through a mix of divestment and business restructuring to deleverage the balance sheet and improve the capital structure. On July 2, the board of directors of Tata Power approved the issuance of 490,566,037 equity shares on a preferential basis to Tata Sons Pvt. Ltd (Tata Sons) for an aggregate consideration of Rs 26 billion.