Jaiprakash Associates approves debt restructuring

Jaiprakash Associates' board has approved the transfer of certain assets and liabilities, including debt of over Rs 11,834 crore, to its subsidiary Jaypee Infrastructure Development Ltd as part of its efforts to cut the overall borrowing of the company.

The company had called a board meeting to consider the recommendations of the audit committee on the debt restructuring process approved by the Joint Lenders' Forum.

The Jaiprakash Associates Ltd (JAL) board "has consented to carry forward the same through the scheme of demerger of the identified assets and liabilities" into a wholly-owned subsidiary of the company, it said in a stock exchange filing late on Saturday.

"The scheme envisages a demerger of the undertaking comprising identified movable assets and liabilities to and vested in the wholly-owned subsidiary of the company, namely Jaypee Infrastructure Development Ltd, as a going concern," it added.

It further said there would be no change in the shareholding pattern of the transferor company as the "allotment of share by the transferee company against consideration is envisaged in favour of the transferor company itself".

"Similarly, no change in the shareholding pattern of the transferee company is envisaged as it will continue to be a wholly owned subsidiary of the transferor company," it added.

There is no cash consideration in the scheme.

"The transferee company shall allot one lakh equity shares of Rs 10 each at par to the transferor company under a slump exchange," it said.

The flagship firm of the debt-ridden Jaypee group is a diversified infrastructure company engaged in engineering, construction or real estate development, manufacture or marketing of cement, hospitality and sports management.

Last month, Jaiprakash Associates had said it had taken various steps to reduce its debt, including sale of its cement plants.

To revive its business operations and repay the debt, the company divested a substantial portion of its cement business, with a capacity of 17.2 million tonnes per annum, to UltraTech Cement at an enterprise value of Rs 16,189 crore.

"The transaction stood consummated on June 29, 2017, and that has resulted in reduction of debt of approximately Rs 14,000 crore, including repayment of outstanding loans to banks/FIs, part payment to holders of FCCBs (foreign currency convertible bonds), repayment of almost all outstanding fixed deposits and interest thereon and other priority payments," it had said earlier.

The company also plans to sell its entire 74 per cent stake in Bhilai Jaypee Cement Ltd to Orient Cement Ltd at a total enterprise value of Rs 1,450 crore, which is expected to be consummated by December 31.

Bhilai Jaypee Cement owns a 1.1 million tonnes per annum clinker plant at Satna in Madhya Pradesh and a 2.2 million tonnes per annum cement grinding unit at Bhilai in Chhattisgarh.

The Jaypee group is facing a debt crisis and its group firm Jaypee Infratech has been taken over by a National Company Law Tribunal (NCLT)-appointed IRP for the recovery of bad loans.

The group is facing a huge protest from home buyers because of significant delays in delivery of projects.