Indian banks eye control of Jaiprakash in debt-for-equity swap -sources

Jaypee Infratech

01/07/2016 16:32

By Devidutta Tripathy and Tommy Wilkes 
    MUMBAI, July 1 (Reuters) - Indian banks plan to take control 
of indebted infrastructure company Jaiprakash Associates Ltd 
 JAIA.NS  by swapping part of its loans for equity, two banking 
sources with direct knowledge of the matter said on Friday. 
    Under the plan, put together under an Indian central bank 
scheme to help lenders recover debts, the founders of 
real-estate-to-road building conglomerate Jaypee Group could 
eventually lose control of their flagship company. 
    One of the sources said Jaiprakash Associates, best-known as 
the builder of India's Formula One racing track, was delaying 
loan servicing payments, leaving lenders no choice but to launch 
a debt-for-equity exchange.  
    Creditor banks will soon decide on the details of the 
debt-for-equity swap plan, said the source at a lender. The 
senior banker, who declined to be named, said Jaiprakash 
Associates owed about 310 billion rupees ($4.6 bln). 
    A spokeswoman for Jaypee Group did not immediately respond 
to a request for comment.   
    Jaiprakash Associates is one of India's most-leveraged 
companies after a period of debt-fuelled growth.  
    Like many Indian infrastructure firms, it is now facing 
mounting pressure from its lenders to pay back debts. An 
economic downturn in India in 2013 and 2014 squeezed revenues 
and the company has struggled to sell assets to raise cash.     
    Earlier on Friday, an unnamed spokeswoman for Jaiprakash 
Associates was quoted by local daily Economic Times as saying 
that ICICI Bank  ICBK.NS , one of the company's main lenders, 
had marked a reference date of June 28 for the debt-for-equity 
swap, or strategic debt restructuring, as the central bank 
scheme is called. 
    In response to a query from Reuters, an ICICI Bank spokesman 
said the bank would not comment on client-specific information.  
    Jaiprakash Associates is meanwhile trying to sell its cement 
assets to UltraTech  ULTC.NS  in a $2.37 billion deal.  
    News reports said this week that the deal had hit a hurdle 
and could be tweaked. UltraTech said in a statement on Friday 
that the agreement to buy Jaiprakash's cement assets was valid 
and under implementation. 
    Indian banks have so far invoked the debt-for-equity swap 
scheme at 19 companies that owed lenders a combined 900 billion 
rupees, according to brokerage Religare. They have struggled, 
however, to find new owners for the companies.  urn:newsml:reuters.com:*:nL3N17S208 
 ($1 = 67.3082 Indian rupees) 
 
 (Editing by Susan Fenton) 
 ((devidutta.tripathy@thomsonreuters.com; +91 84518 40430; 
Reuters Messaging: 
devidutta.tripathy.thomsonreuters.com@reuters.net)) 
 
Keywords: JAIPRAK ASSO DEBT/