ICICI Bank-Led Consortium Acquires Majority Stake In Jaiprakash Power Ventures
Jaiprakash Power converts part debt to equity; gives lenders 51% stake in company
Jaiprakash Power Ventures Ltd. issued shares to ICICI Bank and other lenders, giving them a 51 percent stake in the company under a Strategic Debt Restructuring (SDR) plan, the company said in a disclosure to the stock exchange last week.
The company, on February 18, 2017, allocated the equity to lenders after conversion of part of its outstanding debt. It issued 305.80 crore shares at Rs 10 each to its 23 lenders thereby converting Rs 3,058 crore of debt into equity.
New Company Shareholding
Post conversion of debt into equity, the promoter stake in the company stands diluted to 31.16 percent from the earlier 63.60 percent earlier.
Lender’s Shareholding
Post conversion, ICICI Bank, at 13.72 percent, has the largest shareholding after the promoter, IDBI Bank, Punjab National Bank and State Bank of India hold 5.39 percent, 4.41 percent and 3.50 percent respectively in the company.
Change In Control?
With the lenders now owning 51 percent of Jaiprakash Power, the company ceases to be a subsidiary of Jaiprakash Associates, though the parent continues to own 29 percent of the company’s shares. But it will continue to have management control over the power company till such time the lenders decide to sell their equity to a new promoter.
Under the SDR scheme, the lenders have the right to divest their 51 percent stake in the company to the new promoters.
Owing to various factors such as delays in signing of new power purchase agreements, low off-take by power distribution companies, an abnormal decline in merchant tariffs and lower generation of power, Jaypee’s Bina thermal power plant has adversely impacted operations of the company. This has led to a decline in operating profits and liquidity constraints, the company informed its shareholders while seeking their nod for a preferential allotment to lenders via a postal ballot.
Jaiprakash Power had Rs 11,200 crore in long-term standalone borrowings at the end of September 30, 2016, prior to conversion of debt to equity.