Lenders Ac­quire Con­trol­ling Stake in Jaiprakash Power

Bankers led by ICICI took con­trol by con­vert­ing debt into equity un­der SDR

The Economic Times - - Smart - Our Bureau

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.

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