(Sharecast News) - Infrastructure India announced on Tuesday that it has agreed to sell Indian Energy Limited (IEL) to FA Power Renewables for $4m.
The AIM-traded firm described IEL as an independent power producer, which owns and operates wind farms in Karnataka and Tamil Nadu with a total installed capacity of 41.3 MW.
It said the transaction came after the cancellation of a previous agreement with AVSR Constructions due to its inability to settle the consideration due.
Infrastructure India subsequently started discussions with other interested parties for the sale of IEL, and ultimately reached an agreement with FA Power.
The board described FA Power as an independent power producer based in Bangalore.
Under the terms of the deal, FA Power would pay an up-front exclusivity fee of $0.15m to Infrastructure India, which would be non-refundable except for in limited circumstances in case Infrastructure India did not fulfil its obligations.
The exclusivity period would be 60 business days, during which Infrastructure India would need to meet certain conditions, with a definitive share purchase agreement to be completed.
It said the total aggregate consideration would comprise the exclusivity fee, a further cash payment of $2.28m before the end of the exclusivity period, and IEL's cash and receivables estimated at around $1.6m.
"The board believes that the structure of the transaction, being the acquisition of Infrastructure India's wholly-owned subsidiary, and a mutual desire to complete the transaction swiftly, is in the interests of shareholders," the directors said in their statement.
"Completion of the transaction is subject to a number of conditions therefore there can be no guarantee that the disposal will complete."
IEL was valued at £5.5m in Infrastructure India's unaudited interim results for the period ended 30 September last year.
"The company's creditors remain supportive, and it is expected the consideration due to the company from the sale of IEL will be partially utilised towards settlement of such creditors," the board added.
"As previously announced, the board remains in discussions with third parties regarding the sale of assets, including Distribution Logistics Infrastructure, and further announcements will be made as and when appropriate."
At 0800 BST, shares in Infrastructure India were down 2% at 0.29p.
Reporting by Josh White for Sharecast.com.
Infra.india (IIP)