As of
October 2015, about Rs49,038 crore worth of credit and loan facilities
of Jaypee Group’s three listed entities—Jaypee Infratech, Jaiprakash
Power Ventures and Jaiprakash Associates—have a default rating due to
delay in servicing of debt obligations.
Debt-laden
infrastructure company Jaiprakash Associates Ltd has missed interest
payment due on 7 March on its bonds worth $150 million. The interest
will be paid later from proceeds of its sale of cement assets, the
company said in a statement to BSE on Tuesday. “Interest was payable on
the bonds on the semi-annual interest payment date of 7 March 2016. The
issuer wishes to inform you that it has not paid such interest. The
issuer intends to engage in discussions with holders of the bonds,” the
statement said.
The convertible bonds are due for redemption in 2017 and has an interest rate of 5.75%.
The
company had on 28 February said that it has entered into a pact with
India’s largest cement maker UltraTech Cement Ltd for sale of its assets
in six states for an enterprise value of Rs.16,500 crore in a bid to pare its debt.
While
the deal is subject to regulatory clearances, it also requires an
amendment to the Mines and Minerals Development and Regulation Act,
which at present does not allow transfer of mining rights for allotted
mines from one company or subsidiary to another.
In
the absence of the amendment, Jaiprakash Associates will have to
de-merge its non-cement assets and shareholding in group subsidiaries to
another company and then execute the deal.
“The
deal has some issues with the mining transfer, so one does not know by
what time this could be settled. The bondholders do not have any other
option than wait, a winding up petition will also take time, and it is
wiser for bondholders to wait for a resolution. In the long term, bond
holders will be more cautious and careful in future about the borrower’s
ability,” said Ajay Manglunia, head of fixed income at Edelweiss
Financial Services.
The group has an estimated debt of Rs.75,000 crore as of 31 March 2015, according to a Credit Suisse House of Debt report dated 21 October 2015.
Lenders to the group have been pushing for asset sale to reduce debt.
In
September 2015, Jaiprakash Power Ventures Ltd completed a sale of its
two hydro assets to JSW Energy Ltd for an enterprise value of Rs.9,200 crore.
The
business segments in which the company operates has been adversely
affected due to various factors, including a sluggish economy, global
economic uncertainties, volatile interest and currency rates, the
company said in its statement to BSE. Jaiprakash Associates operates in
cement, engineering, real estate and hospitality sectors.
This
is not the first time that the group has failed to meet a payment
obligation on its bonds. In February, its power subsidiary Jaiprakash
Power Ventures Ltd said it may need more time, beyond 13 February, to
fulfil its repayment obligation to holders of its $200 million foreign
currency convertible bonds.
As of October 2015, about Rs.49,038
crore worth of credit and loan facilities of Jaypee Group’s three
listed entities—Jaypee Infratech Ltd, Jaiprakash Power Ventures and
Jaiprakash Associates Ltd—have a default rating due to delay in
servicing of debt obligations.
On Tuesday, Jaiprakash Associates closed at Rs.7.89 per share, 2.33% higher from its previous close of Rs.7.71 per share.
