MUMBAI/NEW DELHI An Abu Dhabi-led consortium is pulling out of a $1.6 billion deal to buy two hydroelectric power plants from Jaiprakash Power Ventures Ltd, dealing a blow to the Indian group's efforts to cut its debt.
Abu Dhabi National Energy Co (TAQA) told Jaiprakash Power that the decision was due to a change in the group's business strategy and priorities, Jaiprakash said in a stock exchange filing on Thursday.
A senior TAQA official earlier told Reuters that it was exiting the deal, which was made public in March, because of "a change in strategy".
Shares in Jaiprakash closed down 7.49 percent, while shares in parent Jaiprakash Associates finished the day 5.99 percent lower, compared with a rise of 0.48 percent in the Sensex.
Like many of India's infrastructure and construction firms, Jaiprakash has been trying to revive profitability by cutting debt, which has weighed heavily on the group at the same time that an economic slowdown has curbed revenue.
Manoj Gaur, executive chairman of Jaiprakash Associates, said in March the wider group planned to cut its 620 billion rupees ($10.3 billion) of debt by 250 billion rupees by March 2015, largely via asset sales.
Group debt currently stands at 660 billion rupees, television channel ET NOW reported. A spokesman for Jaiprakash could not immediately be reached to confirm the current size of its debts.
TAQA is liable to pay a "break fee", Jaiprakash Power said on Thursday, without giving details.
($1 = 60.1300 rupees)
(Reporting by Devidutta Tripathy and Tommy Wilkes; Editing by Subhranshu Sahu and Jane Baird)