JP Group to convert loan into equity

Debt-laden JP Group today said its shareholders have approved the company's proposal to convert its debt into equity.
Shareholders of Jaiprakash Associates Ltd (JAL) today approved the "option to convert loans, debentures or other borrowings/debt of the company into equity shares/securities of the company," it said in a regulatory filing.
Explaining the rationale behind the move, JAL in a filing had earlier said that recessionary trend in construction/ infrastructure sectors during the last few years coupled with setbacks in timely monetisation of some of the assets of company resulted in cash flow mismatch leading to some delays in honouring debt obligations.

"The lenders may consider an option to convert their loan/credit facilities (including unpaid interest) in full or part thereof, into equity shares/securities of the company...," it had said.
In the last few months, JAL has informed exchanges that it has failed to meet its debt and interest payment commitments.
Jaypee Group has on a consolidated basis failed to repay Rs 2,905.6 crore in principal amount to banks and another Rs 1,558.93 crore in interest payments. JAL owes over Rs 30,000 crore to a consortium of lenders led by ICICI Bank.
In a bid to pare debt, the firm in March inked a deal Ultratech Cement, which agreed to acquire its cement plants in Madhya Pradesh, Uttar Pradesh, Uttarakhand, Himachal Pradesh and Andhra Pradesh with a total capacity of 21.20 million tonnes per annum for Rs 16,189 crore.

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