Lenders to Jaiprakash Associates Ltd., led by ICICI Bank, have given an in-principle approval to a debt restructuring plan, two people close to the development told BloombergQuint requesting anonymity.
The restructuring would involve division of the nearly Rs 30,000-crore debt into three parts. The first portion of about Rs 10,000-crore debt would be moved off the company’s balance sheet as it sells a significant portion of its cement businesses to UltraTech Cement Ltd. About Rs 13,000 crore worth land holdings of the company would be carved out as a special purpose vehicle under the control of the lenders and subjected to a long-term repayment schedule through sale of these properties.
The remaining debt would continue on the company’s books, representing the indebtedness of the remaining sustainable businesses. These would include the company’s residual cement business, engineering procurement and construction (EPC) business, five luxury hotels, power plants, a hospital and a sports business.
A spokesperson for ICICI Bank did not respond to an email seeking confirmation. Manoj Gaur, executive chairman and chief executive officer of Jaiprakash Associates, did not respond to a call, text and an email.
According to the two people quoted above, once the company manages to close the sale of most of its cement operations to UltraTech, lenders will reduce the interest rates on the debt as the promoter would have changed. Similarly, lenders would also reduce interest on the sustainable business as a restructuring effort.
This splitting of debt would significantly reduce the indebtedness of Jaiprakash Associates and help it return to normalcy, the first of the two people quoted above said.
According to the company’s annual report for the year ended March 31, 2016, its indebtedness stood at Rs 31,187 crore.
Lenders to Jaypee Infratech Ltd., a subsidiary of Jaiprakash Associates, have already decided to admit the company to the National Company Law Tribunal to invoke the insolvency and bankruptcy code. The lenders, led by IDBI Bank, took the decision after the Reserve Bank of India directed them to do so.
Last year, lenders to Jaiprakash Associates had invoked the strategic debt restructuring scheme in the company in order to control a majority equity in the company and sell it to a buyer. Apart from the sale of the company’s cement business though, no other major sale is near completion.