Jaiprakash Power Ventures Ltd (JPVL) has received shareholders’ nod through postal and electronic ballot to convert part of its outstanding debt of Rs 3,058 crore into 305.80 crore shares. The company had last month sought shareholder nod for the same. After this issue, total public shareholding of the company will increase to 68.84 per cent from 36.40 per cent, which includes 51 per cent equity with lenders whose debt will be restructured, the company said. “A portion of the outstanding amount of debt (including unpaid interest) amounting to Rs 3,058 crore payable to such lenders by the company is converted into 305.80 crore shares of Rs 10 each (at a price determined in accordance with RBI circular),” the company’s proposal to shareholders has said.
The result of the postal as well as electronic ballot will be announced on February 11. The company had availed of assistance from various banks and financial institutions. Owing to various factors such as lack of visibility of new power purchase agreement (PPA) for 1,320 mw Jaypee Nigrie Power Plant, delay in signing of PPA, low off-take by discoms, abnormal decline in merchant tariffs and lower generation of power, Jaypee Bina thermal power plant has adversely impacted operations of the company, leading to decline in operating profits and liquidity constraints, it had said.
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The company could not pay the outstanding overdues to lenders in a timely manner due to the aforesaid reasons.
The lenders had formed a joint lenders’ forum (JLF) and formulated a corrective action plan (CAP) for the company in order to resolve the financial stress. However, it stated that the company could not perform satisfactorily under CAP due to various factors. Therefore, JLF had finally decided to invoke the provisions of strategic debt restructuring (SDR) on July 25, 2016.
At the JLF meeting on December 21, it was decided that the banks and financial institutions will convert a portion of respective debt of each of such bank or financial institution into equity so that they will, post conversion, collectively hold 51 per cent of the fully paid-up share capital. The company had also said that consequent on the issue and allotment of shares, the lenders will have the right to divest their holdings to new promoter(s).