Jaiprakash Associates calls board meet as banks invoke SDR

Company owes over Rs 30,000 crore to a consortium of lenders led by ICICI Bank

Jaiprakash Associates on Saturday said it had convened a meeting of the board of directors on Monday to discuss the progress of divestment plans and other issues, at a time lenders are invoking the strategic debt restructuring (SDR) option against the debt-laden Jaypee Group.

The development comes in the backdrop of sale of the group’s cement business to Ultratech for Rs 15,900 crore coming under a cloud after lenders invoked SDR earlier this week. “A meeting of the board of directors of the company is scheduled at a short notice on July 4, 2016, inter alia, to review the progress of the divestment plans and other related matters,” the flagship firm of Jaypee Group said in a filing to the BSE.
 

The company said the joint lenders’ forum meeting held to review the progress made so far on the corrective action plan, approved by lenders in January 2015, has agreed for invocation of SDR taking June 28, 2016, as reference date, subject to the approval of lenders. Jaiprakash Associates owes over Rs 30,000 crore to a consortium of lenders led by ICICI Bank and the sale of its 21.2 million-tonne cement business is very crucial for the promoters (the Gaur family) to remain in business.

The company also said that the trading window of the company shall remain closed from 9pm on July 1 to July 6 in pursuant to Sebi (Prohibition of Insider Trading), Regulations, 2015, and in accordance with the code of conduct to “regulate, monitor and report trading by insiders for trading in listed or proposed to be listed securities”. During the closed trading window period, the employees, directors, key managerial personnel and designated persons and their immediate relatives shall not trade in company’s shares, it added.

The Jaypee Group had a consolidated debt of Rs 58,250 crore as of March 2016.

"The Jaypee Group is already an NPA (non-performing asset) for SBI (State Bank of India). The lenders have already invoked the SDR. The JLF (joint lenders forum) will shortly consider the cement sale. Our steering committee which will look into the Jaypee-UltraTech deal whether to accept it or not," a senior SBI official had said yesterday.

The country's largest lender has an exposure of Rs 7,000 crore to JP Associates, which for long has been struggling to service its debt after its infra, led by roads and power business, had cash flow issues.

The company sold most of its power plants over the past two years and the sale of the cement business got stuck due to restrictions on mine leasing.

But the recent modifications in the Mines and Minerals (Development and Regulations) Act have paved the way for the company to transfer its coals mines along with the cement plants, which led to the Birlas agreeing to snap up the cement business late March.

UltraTech and Jaiprakash Associates on March 31 signed an agreement for sale of the latter's cement division, which has a capacity of 21.2 MT in factories located across five states.

Last December, UltraTech was keen to snap up the complete cement portfolio of the Jaypee Group for Rs 19,500 crore along with some private equity players. But the deal did not go through.

Jaiprakash Associates was the third largest cement maker in the country with annual capacity of 31.65 MT. It had sold 13.3 MT capacity in 2014-15 to repay debts.

The company had earlier sold two cement units, in Gujarat and MP, to UltraTech for Rs 3,800 crore and Rs 5,400 crore, respectively.

It had sold its stake in the Bokaro cement unit to Dalmia Cement for Rs 667 crore and the Panipat-based grinding unit to Shree Cement for Rs 360 crore. The group had sold its hydel power projects to JSW Energy for Rs 9,700 crore last year.

Shares of the company have lost more than three-fourths of its market value since last January. Yesterday it closed at Rs 8.59, down over 3.2 per cent on the BSE whose main index jumped 0.55 per cent.

Its 52-week high was Rs 14.90 and the low was Rs 5.30. Once a Sensex heavyweight, the company had market capitalisation of just Rs 2,089.52 crore.