An ICICI Bank-led consortium of lenders is finalizing a resolution plan for debt-ridden Jaiprakash Associates Limited (JAL) outside the bankruptcy process, and hopes to submit it to the Reserve Bank for its approval within a month, three people in the know told CNBC-TV18.
As per people in the know, the resolution plan underworks is similar to the restructuring plan that lenders had firmed up before the RBI drew up the second list of defaulters to be sent to NCLT (National Company Law Tribunal) in 2017.
Banks are working out this restructuring plan under RBI’s June 7 circular for resolution of stressed assets. It involves splitting the company’s approximately Rs 15,000 crores of bank debt into sustainable and unsustainable portions, and hiving off parts of the businesses for sale to strategic investors, CNBC-TV18 has learned.
The real estate assets of the company and related loans of about Rs 10,000 crores are proposed to be hived off as a separate subsidiary, said one of the people quoted earlier. The land parcels are then proposed to be monetized over a period of time to recover dues, this person added.
Jaiprakash Associates’ remaining cement businesses in northern and central India are proposed to be demerged into a separate company, and put on the block, added another person involved in the talks. The demerged entity with the cement business will also house about Rs 3,500 to Rs 4,000 crores of debt, which would have to be serviced by the new investor, as per people in the know.
“We may convert this Rs 3,500-4,000 crores of debt under the cement business into NCDs (non-convertible debentures),” said a senior executive from a large bank with exposure to the company.
The remaining portion of the debt is seen as sustainable and will continue to be serviced by Jaiprakash Associates- which will house the residual businesses of hospitality, EPC and others, said this executive.
While most of JAL’s lenders are on board with this plan and the remaining are also expected to give their approvals within a month, bankers cautioned that ultimately the Reserve Bank of India’s approval would be needed to implement this plan, without which the restructuring plan would come to naught.
JAL was among the second list of defaulters identified by the Reserve Bank to be sent to NCLT in 2017, and the lead lender ICICI Bank filed a bankruptcy petition against the company in September 2018. However, since then, little progress has been made and the Allahabad bench of NCLT has yet to even admit the petition.
CNBC-TV18 is awaiting a response from Jaiprakash Associates and its key lenders on the story.