UltraTech, JP Associates claim to have deal on track

The transaction will help debt-heavy Jaiprakash Associates to reduce its debt, which had touched a high of Rs 60,000 crore

Jaiprakash Associates' plan to sell 21.2 million tonne per annum (mtpa) cement capacity to UltraTech Cement for Rs 15,900 crore is on track, claim both the companies. This comes amid speculation that the deal has come under trouble.

“There have been some issues in meeting the statutory dues by Jaiprakash Associates,” said a banker familiar with the development. “But we expect it to be sorted out soon,” he says.

The transaction will help debt-heavy Jaiprakash Associates to reduce its debt, which touched a high of Rs 60,000 crore. The lenders, led by ICICI Bank, had asked the company to sell assets so that it could repay its loans. UltraTech signed definitive agreements on April 1 for the acquisition of cement plants in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, having capacity of 21.2 million tonnes. The acquisition was expected to take around 12-14 months to close and was subject to regulatory approvals.

The deal valued the cement capacity at $107 per tonne. Of the total 21.2 mtpa capacity, four mtpa is under commissioning.

UltraTech has plans to take over Jaypee's Rs 11,500-crore debt as part of the deal, which will be re-financed by it at lower rates due to its good credit rating. For the rest Rs 4,400 crore, UltraTech will fund it by taking additional debt which it would raise on its own balancesheet. There is no upfront payment to Jaypee and the money will be paid on the date of closing. An additional Rs 470 crore will be paid by UltraTech once the grinding unit is completed.