Ksk Power Regulatory News (KSK)

1 Nov 2006 08:00

KSK Power Ventur PLC01 November 2006 1 November 2006 Not for publication, distribution or release in the US, Canada, Australia, the Republic of Ireland, South Africa or Japan KSK POWER VENTUR PLC Placing of 28,878,505 Ordinary Shares of 0.1p each at 107p per share Admission to trading on AIM KSK Power Ventur plc ("KSK" or "the Company"), an innovative developer ofprivate power projects in India, announces completion of a successful Placing ofOrdinary Shares by Arden Partners plc ("Arden Partners") and its admission totrading on AIM today. Placing and Admission • The Company has raised approximately £30.9 million through a placing of 28,878,505 Ordinary Shares at 107 pence per share. • Arden Partners, nominated adviser and broker to KSK, has placed all of these shares with institutional investors. • Of the net proceeds of the Placing, approximately £11.5m will be used to invest in power projects and approximately £13.8m will be used to develop fuel assets. • In addition to raising the funds, the Directors believe that Admission will increase the Company's profile both in India and internationally, enable access to capital markets and diversify its investor base. • On Admission, the Company will have an initial market capitalisation of approximately £137.9 million. Placing Statistics: +-----------------------------------------------------------------+-------------+|Placing Price | 107p|+-----------------------------------------------------------------+-------------+|Number of Placing Shares | 28,878,505|+-----------------------------------------------------------------+-------------+|Number of Ordinary Shares in issue immediately following the | 128,878,505||Placing and Admission | |+-----------------------------------------------------------------+-------------+|Placing Shares as a percentage of the Enlarged Share Capital | 22.4%|+-----------------------------------------------------------------+-------------+|Estimated net proceeds of the Placing (1) |£25.3 million|+-----------------------------------------------------------------+-------------+|Market capitalisation immediately following Admission at the | £137.9||Placing Price | million|+-----------------------------------------------------------------+-------------+ (1) Net proceeds are stated after the deduction of estimated expenses ofapproximately £1.9 million and the buy-back monies to be paid pursuant to theReorganisation. S. Kishore, Executive Director, commented: "In the deregulated Indian market businesses are increasingly looking forconsistent and economic power supplies. KSK has a clear track record ofdelivering innovative private power project solutions and is well positioned tobenefit from this growing energy demand. Our approach enables income generationfrom all parts of the value chain and we have a visible pipeline of furtherplants becoming operational over the coming months. We are delighted to have successfully completed the IPO and look forward tojoining AIM. These are exciting times for the Company and the successful offerwill help us to exploit the growth opportunities open to us. We look forward toupdating investors on developments in the coming months." www.ksk.co.in For further information, please contact: KSK Power Ventur plc +(91) 40 2355 9922S. Kishore, Executive DirectorMike Kirk, Non-executive Director 020 7398 1632 Arden Partners plc 020 7398 1600Richard DaySteve Pearce Hogarth Partnership Limited 020 7357 9477Nick DentonBarnaby Fry Arden Partners, which is regulated and authorised in the United Kingdom by theFinancial Services Authority, is acting as nominated adviser and broker (for thepurpose of the AIM Rules) exclusively for the Company in connection with thePlacing and Admission and is not acting for any other person and will not beresponsible to any other person for providing the protections afforded toclients of Arden Partners, nor for advising any other person in connection withthe transactions and arrangements detailed in this document. Theresponsibilities of Arden Partners, as nominated adviser and broker under theAIM Rules, are owed solely to the London Stock Exchange plc and are not owed tothe Company or to any Director or to any other person in respect of theirdecision to acquire Ordinary Shares in reliance on any part of this document. Noliability whatsoever is accepted by Arden Partners for the accuracy of anyinformation or opinions contained in, or for the omission of any materialinformation from, this document, for which it is not responsible. BACKGROUND KSK is a new holding company which, following the Reorganisation and itsresultant ownership of KSK India, will be the ultimate holding company of theEnlarged Group. The Promoters, S. Kishore, K. A. Sastry and V. H. Kiran, have been involved indeveloping power projects in India since 1998. They established KSK India inFebruary 2001 to exploit emerging opportunities in the Indian power sector andhave since focused its strategy on the private sector power development market,providing development, operation and maintenance services predominantly to heavyindustrials operating in India. KSK India has developed, or is currently developing, power stations capable ofgenerating in aggregate 400 MW of electrical power for a number of customersincluding India Cements Limited, Lafarge India Private Limited and Zuari CementLimited. KSK India has a pipeline of future projects which are anticipated to becompleted by 2011 resulting in a total capacity of 3,200 MW. In order to control the fuel supply to future operations, KSK India has alsosecured, or is in the process of securing, access to certain coal and ligniteassets and resources across India. To date the development of each project has been funded by equity provided byKSK India, customers and financial investors, and debt from various financialinstitutions. Currently, the equity for three of the existing projects has beenfinanced in part through a joint venture with Lehman. It is intended that theequity for future projects will be funded by KSK (via this joint venture withLehman) along with other investors. THE KSK BUSINESS The Promoters and KSK India have a demonstrated track record of developing smalland medium sized power plants for a range of customers. They have established ahighly qualified and experienced team to undertake this development activity.Wherever possible, KSK will use a standard configuration of equipment andconstruction in order to optimise speed of delivery of the completed project andto minimise costs. KSK India outsources the planning, set-up and operation of its power plants,using a range of service providers as follows: •Consultant engineers undertake the power plant design and configuration. •Contractors undertake the procurement and construction requirements for each power plant within defined plant operation parameters. •Contractors also undertake the ongoing operation and maintenance of the power plants. KSK India has a wide pool from which to select contractors (both domestic andinternational) to provide these services and is able to invite tenders at eachstage thereby promoting competition and innovation of design. KSK STRATEGY FOR GROWTH KSK's strategy for growth is to work with major international and Indianbusinesses and electricity distribution companies to ensure that they haveaccess to a dependable and cost effective source of electrical power. This willbe achieved through the development, construction, operation and maintenance ofoptimally sized power plants with appropriate fuel sources. To this end KSKIndia has secured, and will continue to secure, access to various fuel sourcesacross India to help maintain security of supply and cost control. THE POWER SECTOR IN INDIA The supply and availability of dependable and economic power supplies toindustry will be fundamental in ensuring that this anticipated growth in IndianGDP is achieved, which puts reducing the deficit of power at the forefront ofthe political agenda. As a result, both the federal, as well as the stategovernments have the authority to legislate on this subject. The Indian Electricity Act 2003, removed licensing requirements for powergenerators, provided for open access to transmission and distribution networksand removed restrictions on the right to build captive generation plants.Specifically, the open access reforms have increased interest in privateinvestment in power generation, as companies are able to sell their output todifferent distribution companies and/or, directly to consumers. DIRECTORS The Board consists of six directors in respect of whom brief biographies are setout below. Padma Bhushan Mr. T.L. Sankar (age 72) - Non-Executive Chairman. Mr Sankar isrenowned in India as an energy expert, having received the Padma Bhushan titlein India, and has more than four decades of experience in the sector, includingSecretary of the Fuel Policy Committee (1970-75), Principal Secretary of theWorking Group on Energy Policy (1978-79), as a member of the Advisory Board onEnergy, Government of India and as a member of the Integrated Energy PolicyCommittee. Mr. Sankar also served as Chairman of APSEB - the state power utilityin southern India. Currently, Mr. Sankar is the Chairman of the Expert Committeefor the comprehensive review and recommendation of a roadmap for the coal sectorin India. He has also served the United Nations as an adviser on energy issuesto the governments of Sri Lanka, Tanzania, Jamaica, North Korea and Bangladeshand has headed the Asian Development Bank's Asian Energy Survey. Mr. S. Kishore (age 44) - Executive Director. Mr. Kishore is one of thePromoters and is a chartered accountant by profession. Together with Mr. Sastry,Mr. Kishore set up K&S Consulting Group Private Ltd and subsequently with Mr.Sastry and Mr. Kiran Vadlamani, KSK India. Over the years, he has worked onvarious matters across the power generation spectrum. At KSK, he heads thebusiness development and capital formation groups. Mr. K. A. Sastry (age 47) - Executive Director. Mr. Sastry is one of thePromoters and is a chartered accountant by profession. Together with Mr.Kishore, Mr. Sastry set up K&S Consulting Group Private Ltd and subsequentlywith Mr. Kishore and Mr. Kiran Vadlamani, KSK India. Mr. Sastry heads up theexecution and operations divisions of the KSK India business, as well as havingresponsibility for the financial accounts and records for the Enlarged Group. Mr. V. H. Kiran (age 43) - Executive Director. Mr. Kiran is one of the Promotersand is a chartered accountant by profession. He worked as a partner inUmamaheswara Rao & Co Chartered Accountants for 8 years before he joined Mr.Kishore and Mr. Sastry at K&S Consulting Group Private Ltd and subsequently KSKIndia. Over the years, he has worked on numerous consulting assignments forvarious clients across different sectors in the area of corporate finance,capital markets and merger and acquisition transactions. At KSK, he wasinitially involved in strategy, legal and regulatory matters. He currently looksafter the asset management division and manages the small is beautiful fund. Mr. M.P. Kirk (age 46) - Non-Executive Director. Mr. Kirk was managing directorof Weber Shandwick Square Mile, a financial communications consultancy, untilJuly 2005. He joined Weber Shandwick from Cazenove, the UK investment bank,where he worked in corporate finance for over 13 years, four of those as apartner in the firm. Whilst at Cazenove, Mr. Kirk advised companies on a widerange of corporate issues including the demerger of Centrica plc from BritishGas plc, the Lattice plc demerger from BG plc and the UK listings of John WoodGroup PLC and KBC Advanced Technologies plc. His early experience was in theenergy and insurance sectors, having started his career at British NuclearFuels. Mr. Kirk is also a member of the Primary Markets Group of the LondonStock Exchange. A chartered engineer, Mr. Kirk has an MBA in finance and degreesin chemical engineering and nuclear fuel technology. Mr. Kirk is also anon-executive director of KBC Advanced Technologies plc. Mr. S.R. Iyer (age 66) - Non-Executive Director. Mr. Iyer joined the State Bankof India as a probationary officer in 1962 and after holding various positionswith the Bank in India and abroad, retired as its managing director in 2000.Since then, he has been part of various banking industry working groups in Indiaand was Executive Chairman of the Credit Information Bureau (India) Limited fromFebruary 2001 to February 2004, a joint venture promoted by the State Bank ofIndia and the Housing Development Finance Corporation Limited. FINANCIAL INFORMATION The following financial information summarises the audited financial record ofthe KSK India Group for the three year period ended 31 March 2006. Year ended Year ended Year ended 31 March 2006 31 March 2005 31 March 2004 US$'000 US$'000 US$'000Profit & Loss AccountRevenue 5,316 6,086 1,419Gross Profit 2,834 3,947 656Profit from operations 484 1,571 96Profit before tax 880 441 (68) As at As at As at 31 March 2006 31 March 2005 31 March 2004 US$'000 US$'000 US$'000Balance SheetNon current assets 36,977 13,901 8,436Current assets 17,626 10,694 5,358 54,603 24,595 13,794Non current liabilities (26,421) (4,947) (6,627)Current liabilities (20,289) (11,733) (3,955)Equity (7,893) (7,915) (3,212) (54,603) (24,595) (13,794) CURRENT TRADING AND FUTURE PROSPECTS In addition to the three KSK operating power plants RVK, Kasargod andCoromandel, another plant, Arasmeta, has recently also become operational and isgenerating power. There is a clear pipeline of further power plants becoming operational over thecoming months and KSK are also discussing many new projects with customers usinga variety of fuel sources. REASONS FOR ADMISSION AND USE OF PROCEEDS Of the net proceeds of the Placing, approximately £3.7 million will be appliedby KSK India to buy back and redeem the shares in it held by K&S as part of theReorganisation, approximately £11.5 million will be used to invest in powerprojects and approximately £13.8 million will be used to develop fuel assets. The Directors believe that the Admission will also raise the Company's profile,enable future access to capital markets and diversify its investor base. Definitions The following words and expressions have the following meanings throughout thisPress Announcement, unless the context requires otherwise: "Admission" the admission of the Enlarged Share Capital to trading on AIM and such admission becoming effective in accordance with the AIM Rules; "AIM" the market of that name operated by the London Stock Exchange; "AIM Rules" the rules of the London Stock Exchange governing admission to and the operation of AIM, as amended from time to time; "Arden Partners" Arden Partners plc (Registered No. 4427253) whose registered office is at Arden Partners House, 17 Highfield Road, Edgbaston, Birmingham B15 3DU; "Bijlee" Bijlee Bharat Holdings, a wholly owned subsidiary of the Company incorporated in Mauritius; "Company" or "KSK" KSK Power Ventur plc and all of its subsidiaries and interests in SPVs following the Reorganisation; "Directors" the directors of the Company named in this Announcement; ''Enlarged Group'' the Existing Group as further enlarged pursuant to the Reorganisation so as to include the KSK India Group; ''Existing Group'' the Company and Bijlee; "KSK India" KSK Energy Ventures Private Limited; "KSK India Group" KSK India and each of its subsidiary undertakings and interests in SPVs; "K&S" K&S Consulting Group Private Limited, a company controlled, and majority owned, by the Promoters; "Lehman" LB India Holdings Mauritius I Limited; "London Stock Exchange" London Stock Exchange plc; "Ordinary Shares" the ordinary shares of 0.1 pence each in the capital of the Company; ''Placing Agreement'' the conditional agreement dated 26 October 2006 between (1) Arden Partners, (2) the Company (3) the Directors and (4) K&S relating to the Placing; "Placing" the conditional placing by Arden Partners of the Placing Shares with institutional and other investors at the Placing Price pursuant to the Placing Agreement; "Placing Price" 107p per Placing Share; "Placing Shares" the 28,878,505 new Ordinary Shares the subject of the Placing; "Press Announcement" this press announcement; "Promoters" Mr. S Kishore, Mr. K A Sastry and Mr. V H Kiran, who are the promoters of the Company and KSK India; "Reorganisation" the subscription for new shares in KSK India by Bijlee and subsequent buy-back by KSK India of all its existing shares held by K&S which will result in the KSK India Group becoming wholly-owned by the Existing Group; "SPV" special purpose vehicle, each being an Indian registered company incorporated for the purpose of a specific power project in which the KSK India Group will typically hold a minority interest; - Ends - This information is provided by RNS The company news service from the London Stock Exchange