UAE's JBF RAK PET output stalls amid debt restructuring - COO (updated)

JBF Industries

10/08/2017 14:57

(Recasts with comment by JBF RAK executive, context, details) 
    By Tom Arnold, Hadeel Al Sayegh and Tanvi Mehta 
    DUBAI/BANGALORE, Aug 10 (Reuters) - JBF RAK, a United Arab 
Emirates subsidiary of Indian polyester maker JBF Industries 
 JBFI.NS , expects to resume production of PET resin as soon as 
next month after financial problems in the group disrupted 
operations, a senior company official said. 
    "Restructuring talks with banks are ongoing and the outcome 
will be for the benefit of all stakeholders," JBF RAK's Chief 
Operating Officer Rohit Maindwal told Reuters by telephone on 
Thursday. 
    The firm is in talks with banks about renegotiating around 2 
billion dirhams ($544.6 million) of debt, banking sources told 
Reuters earlier this week. Maindwal declined to confirm the 
amount or comment on progress in the talks with banks. 
 urn:newsml:reuters.com:*:nL5N1KS061 
    JBF RAK, which exports around the world, has a 45 percent 
share of the market for PET chips in the six-nation Gulf 
Cooperation Council, according to the website of JBF Industries, 
which is among the top five global producers of PET chips. 
    PET, or polyethylene terephthalate, is used as a raw 
material for making packaging materials such as bottles and 
containers for packaging a wide range of food products and other 
consumer goods. 
    JBF RAK stopped PET production at its plant in the emirate 
of Ras Al Khaimah at the end of June after the company 
experienced a shortage of working capital, Maindwal said. 
    "PET was put under a temporary stoppage at the end of June 
as we are expecting our raw material supplies from our Indian 
client to start some time in September, and then we will 
restart," he said.  
    Before the stoppage, JBF RAK produced about 350,000 tonnes 
of PET annually. The company has continued to make polyester 
film, Maindwal added. 
    In a statement earlier on Thursday, parent JBF Industries 
said it was working with its lenders to resolve cashflow issues 
and that all its plants were running "satisfactorily". 
    Its shares closed 5.9 percent higher on the National Stock 
Exchange of India after hitting a three-year low earlier in the 
day. They have dived more than 20 percent this week because of 
concern about the company's debt. 
    JBF's board is due to meet on Friday to discuss the 
company's earnings and the sale or restructuring of overseas 
units to cut debt. India Ratings and Research, which cut the 
company's rating to 'D', said last month that the downgrade was 
due to "significant deterioration in the group's financial risk 
profile, resulting from losses in overseas operations". 
    In its statement on Thursday, JBF said some of its payments 
to Indian lenders had been delayed, complaining that recent 
policy changes by the Indian government had hurt its cashflow. 
    Bankers in the UAE told Reuters that JBF RAK had requested 
fresh working capital to help it restart PET resin production. 
In addition to the 2 billion dirhams of debt being renegotiated, 
the firm owes an additional 1 billion dirhams to international 
lenders, they said. 
    Maindwal said JBF RAK's chief executive Cheerag B. Arya, a 
prominent Indian businessman known for his collection of Ferrari 
cars, was out of the country. Banking sources said B.C. Arya, 
chairman of the parent firm, was cooperating with banks in 
discussing the debt. The two could not be reached for comment.  
    Banks with exposure to JBF RAK include Mashreq  MASB.DU , 
Abu Dhabi Commercial Bank  ADCB.AD , United Arab Bank  UAB.AD , 
Ajman Bank  AJBNK.AD  and National Bank of Fujairah  NBF.AD , 
according to the bankers and Thomson Reuters data. Private 
equity firm KKR took a 20 percent stake in JBF Industries by 
investing $150 million in 2015. 
 
 (Additional reporting by Devidutta Tripathy in Mumbai; Editing 
by Andrew Torchia and Adrian Croft) 
 ((tanvi.mehta@thomsonreuters.com; +91 80 67494756 ; Reuters 
Messaging: tanvi.mehta.thomsonreuters.com@reuters.net)) 
 
Keywords: JBF INDUSTRIES DEBT/