Jaiprakash Associates to transfer shares equal to 7.71% equity stake to ICICI Bank to settle part loan

New Delhi: Crisis-hit Jaypee Group's flagship firm Jaiprakash Associates Ltd (JAL) will give 7.71 per cent stake, worth Rs 366 crore at current market price, in the company to ICICI Bank to clear part of the outstanding loan.

According to sources, ICICI bank has an exposure of around Rs 3,000 crore in JAL, which is into many businesses including cement, construction, hotels and real estate.

In a regulatory filing, JAL on Tuesday informed that the company has entered into a settlement agreement with ICICI Bank and will transfer over 18.93 crore shares to the bank.

'...with a view to give thrust to the ongoing efforts of the company to reduce its debt, the company, along with Trusts holding 18,93,16,992 equity shares of the company have entered into a Settlement Agreement with ICICI Bank (lender) to transfer the said shares to lender,' JAL said.

The share price of JAL stood at Rs 19.35 apiece on the BSE on Monday. At Monday's price, the value of 18.93 crore shares is Rs 366 crore.

The value/consideration of the shares would be arrived on the basis of the closing price at National Stock Exchange of India on the day prior to the day of actual transfer of shares to the demat account of the lender, it added.

Separately, ICICI Bank informed that these shares were pledged to ICICI Bank.

'...in settlement of their payment obligations in relation to the facilities extended to JAL by ICICI Bank, GACL Trust, JEL Trust, JCL Trust and JHL Trust (collectively, obligors) have agreed to transfer their shares in the company to the Bank,' ICICI Bank said.

These shares constitute 7.71 per cent of the paid up share capital in JAL, it added.

After settlement with the obligors, ICICI Bank said it would reduce its dues from JAL, to the extent of value of shares transferred to the bank, under the settlement agreement.

ICICI Bank's principal exposure to JAL is about Rs 3,000 crore, which has been fully provided in the books of the bank, sources said.

Earlier this month, JAL informed that it has defaulted on loans worth Rs 4,258 crore, including principal and interest amount.

JAL had said that on October 31 the company defaulted on repayments of a principal amount of Rs 1,733 crore and an interest of Rs 2,525 crore.

The loans pertained to various banks, and the nature of the obligation is fund-based working capital, non-fund-based working capital, term loans and FCCB (foreign currency convertible bonds).

'The total borrowing (including interest) of the company is Rs 29,272 crore, repayable by 2037, against which only Rs 4,258 crore is overdue as on October 31, 2023,' JAL had said.

Out of the said borrowing of Rs 29,272 crore, Rs 18,682 crore will get further reduced on transfer to the proposed Special Purpose Vehicle (SPV) for which the Scheme of Arrangement duly approved by all the stakeholders is pending sanction of NCLT. The entire loan is in any case under restructuring, it added.

The company said it has been taking tangible steps to reduce the borrowings.

'Post the proposed divestment of cement business and the restructuring under consideration, the borrowing will get almost to nil upon implementation of revised restructuring plan,' it said.

JAL also said that ICICI Bank had approached the NCLT Allahabad on the direction of the RBI under Section 7 of the Insolvency and Bankruptcy Code (IBC) 2016 against the company. It has contested the move.

'The matter is pending to be decided simultaneously with the Scheme of Arrangement for transfer of real estate to the SPV to be sanctioned by the NCLT,' the filing said.

In September 2018, ICICI Bank filed an insolvency petition against JAL.

The country's biggest lender SBI has also moved the NCLT against JAL, claiming a total default of Rs 6,893.15 crore as of September 15, 2022.

Earlier this year, JAL and its group firms announced the sale of its remaining cement assets to Dalmia Bharat Ltd at an enterprise value of Rs 5,666 crore and exit from the sector as part of its strategy to reduce debt.

As part of its debt resolution exercise, JAL had sold more than 20 million tonnes per annum cement capacity to Aditya Birla group firm UltraTech Cement between 2014 and 2017.

In a case related to its erstwhile subsidiary Jaypee Infratech Ltd (JIL), Mumbai-based realty firm Suraksha Group had in March got approval from the NCLT for its bid to acquire JIL and complete around 20,000 apartments in Noida.

However, many parties have approached the National Company Law Appellate Tribunal (NCLAT) against the NCLT order.