Lenders Acquire Controlling Stake in Jaiprakash Power
Bankers led by ICICI took control by converting debt into equity under SDR
Mumbai: Bankers led by ICICI Bank have acquired controlling stake in Jaiprakash Power Ventures by converting debt into equity after the power generation and transmission company of Jaypee Group defaulted on repayment of loans. Lenders now have 51% stake in the company, while promoters’ stake has more than halved to 31% from 63.6% in December 2016, the company said in a filing to stock exchanges.
Jaiprakash Power has allotted 305 crore shares to 23 banks. Prior to the conversion of debt into equity, lenders had an exposure of ₹ 25,000 crore in the company.
The move will reduce the firm’s debt by ₹ 3,058 crore. Shares of the company rose 4.7% on Thursday to close at ₹ 6 a piece on the Bombay Stock Exchange (BSE).
Among the lenders, ICICI Bank now hold 13.7% stake in Jaiprakash Power Ventures, followed by IDBI Bank with 5.3% stake, Punjab National Bank with 4.4%, Central Bank of India with 4.1%, and State Bank of India with 3.5% stake. Other lenders with stake in the company include Bank of India, IDFC Bank, Canara Bank and LIC. Jaiprakash Associates owns 29% stake in Jaiprakash Power Ventures.
The conversion of debt into equity shares is done under strategic debt restructuring (SDR) scheme, which gives lenders the right to acquire majority equity stake in a defaulting company at the prevailing market price and subsequently, sell their stake to a prospective buyer. Lenders had initiated SDR in the company in July 2016 itself.
Over the last two years, lenders have initiated SDR in over two dozen firms with the intension to revive the financially ailing companies by finding a new promoter.