The outstanding debt of the Jaiprakash Associates group company has reduced to less than Rs 6,000 crore, from more than Rs 11,000 crore, following the restructuring. The terms involve an interest write back of about Rs 2,000 crore that will help the company report a net profit this fiscal, people in the know said.
ICICI Bank, which had filed for initiating proceedings under the Insolvency and Bankruptcy Code against the company in 2018, last Friday moved an application before the Ahmedabad bench of NCLT for its withdrawal. Since the earlier petition is yet to be admitted, the bank will be allowed to withdraw it, said a person cited above.
A Jaiprakash Power Ventures spokesperson confirmed that the lenders had approved the debt restructuring, but refused to divulge details. An ICICI Bank representative didn’t respond to queries until press time Monday.
“The consortium of lenders has agreed to a restructuring whereby they reduced outstanding loan of Rs 11,282 crore to Rs 5,800 crore; the balance was converted into equity or compulsorily convertible preference shares,” said a senior banker involved in the process.
As many as 22 banks and financial institutions have agreed to convert Rs 3,840 crore of debt into compulsorily convertible preference shares, with a maturity period of 29 years and coupon rate of 0.01%, said the banker. The remaining debt of Rs 5,800 crore on the company’s book will carry an interest rate of 9.50%, this banker added.
People in the know said the restructuring would lead to an interest write back of nearly Rs 2,000 crore for the company, which in turn would enhance its net worth and make it profitable from the current fiscal year itself.
“After the restructuring, the company’s annual interest cost burden will decline from nearly Rs 1,500 crore to less than Rs 600 crore, leading to a gain of nearly Rs 1,000 crore annually in interest cost alone,” said a senior company official, speaking on the condition of anonymity.
Under the scheme of arrangement, Jaiprakash Power Ventures has also converted $110 million (equivalent to Rs 663 crore based on the exchange rate when the restructuring process started) of foreign currency convertible bonds (FCCBs) into equity at Rs 12 a share, as against the prevailing market price of less than Rs 2 per share.
The company has also converted about Rs 350 crore of corporate loan from JSW Group into equity shares at Rs 10 each. After restructuring, JPVL has become a professionally run power company with original promoter JP group’s shareholding declining to 24%. Banks and financial institutions own a 42.643%, while FCCB holders got 8.36% and JSW Group have a tad over 5.1%. About 19% is held by public shareholders.
JPVL has generating capacity of 2,220 MW (400 MW of hydel and 1,820 MW of thermal). It owns a 74% in a 224-km transmission network to evacuate power from the Karcham Wangtoo hydel project.
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1 Comment on this Story
Pvk rao410 days ago
Good initiative at last..Lacs of investors have invested crores of rs with a a trust on jp group and in pathetic situation..Now all such investors have great sigh of relief..Their long waited wishes will transform or not ?