Lenders look to sell Jaiprakash Power's convertible shares in open market

ICICI Bank is in talks with power companies to facilitate sale of bankrupt company's unit

ICICI Bank and other Indian lenders seek to offload their stakes in the power business of bankrupt Jaiprakash Associates by selling in the open market compulsory convertible preference shares (CCPS) that have a face value of Rs 3,800 crore. ICICI Bank is in talks with power companies to facilitate the sale, according to a banking source familiar with the matter.

 

Jaiprakash Associates Ltd (JAL), which is undergoing bankruptcy proceedings, owns 24 per cent in Jaiprakash Power Ventures. "Lenders are looking to sell the CCPS on behalf of all banks and this process has been underway for a while," said the source who did not want to be named.

 

Gwalior-based Jaiprakash Power Ventures was established in December 1994 and is engaged in hydro and thermal power generation, cement grinding, and captive coal mining.

 

“ICICI Bank has invited expressions of interest to convert its CCPS into equity. This would then dilute the promoter stake in the power company, which has considerable assets that are part of the bids for JAL. It is, however, premature to sell CCPS at a stage when the future of the company is not certain due to the ongoing insolvency process,” said the source.

 

ICICI bank did not respond to an email from Business Standard.

 

The CCPS issued by Jaiprakash Power Ventures have a maturity period of 29 years but can be converted after 20 years or earlier.  

 

Adani Enterprises, Dalmia Bharat, PNC Infrastructure, Vedanta, and Jindal Steel & Power have submitted their resolution plans for JAL. The total claims by creditors amount to more than Rs 59,000 crore.

 

JAL, which was sent to the insolvency process on June 3 last year, has assets in cement, construction, hospitality, and real estate. Its real estate properties include Jaypee Greens in Greater Noida, Jaypee Wish Town in Noida, and Jaypee International Sports City near the upcoming Jewar International Airport in Uttar Pradesh.

 

Adani Enterprises last week submitted a proposal before the Competition Commission of India (CCI) to acquire JAL through the corporate insolvency resolution process, according to the information available on the regulator’s website.

 

Of the five companies that have bid for JAL, Adani is the first to have submitted its application and leads the race. After a recent Supreme Court ruling, the resolution applicants are expected to obtain the CCI’s approval for their plans prior to approval by the Committee of Creditors.

 

The Ministry of Corporate Affairs, however, is expected to amend this provision in the proposed Insolvency and Bankruptcy Bill to clarify that prior permission of the CCI is not required for submitting bids under the corporate insolvency resolution process.

 

In its five-page summary of the proposed combination, Adani Enterprises and Adani Infrastructure and Developers Private Limited have stated that they (acquirers) are backed by promoters, management, and other Adani Group companies that have a strong record of accomplishment of acquisition in and turnaround of distressed companies post acquisitions.

 

“It has the experience to turn around the distressed assets in general as well as those specialized in the various relevant business sectors that the Target has business interests,” the company has stated.

 

It has also said that its proposed combination does not raise competition concerns in any plausible relevant market.  

 

The company has identified certain potential vertical linkages regarding products and services such as limestone, fly ash, clinker, coal management services, ready-mix concrete, and provision of construction activities, which are linked to the cement manufacturing market.  

 

The other bidders are also expected to file for CCI approval of their proposals soon.

 

JAL has assets worth more than Rs 36,140 crore, with real estate having the largest share (Rs 19,119 crore). The company’s total revenue in FY24 was Rs 6,568 crore.