Lenders to the loss-making Jyoti Structures have decided to convert Rs 307.6 crore of loans into shares at a value of Rs 26.90 apiece, a premium to the current market price, sources told FE. The move is part of a strategic debt restructuring (SDR), a scheme outlined by the Reserve Bank of India (RBI) earlier this year. The stock closed at Rs 17.70 on Tuesday on the BSE, down 6.84% from its previous close.
Lenders have 18 months from the date the SDR scheme is effective to find a buyer for the company. Should banks fail to usher in a new promoter, the asset would be classified as a non-performing asset.
RBI’s SDR guidelines allow banks to convert debt to equity at a value that is not less than its face value and banks are not required to show a mark-to-market loss or profit for SDR conversions.
The consortium of 21 lenders is led by State Bank of India (SBI). In FY15, the Mumbai-based company reported a net loss of Rs 396 crore on the back of Rs 3,111 crore in revenues and its interest expenses almost doubled to Rs 426 crore in FY15. In Q1 FY16, Jyoti Structures reported a net loss of Rs 152 crore owing to Rs 158 crore in interest costs.
Bloomberg data show that its FY15 gross debt was at Rs 2,356 crore, up from Rs 1,563 crore in FY14.
Jyoti Structures’ debt was restructured by a joint lenders’ forum (JLF) in September 2014. Headed by Prakash K Thakur as its vice-chairman, the company is promoted by KR Thakur (3.34%), Prakash K Thakur (4.51%), Valecha Infrastructure (4.96%) and Surya India Fingrowth (5.35%).
Following rules put out by the RBI in June, this year bankers have decided to try out a restructuring for a handful companies including Electrosteel Steels, Lanco Teesta Hydro Power, Monnet Ispat, Coastal Projects and IVRCL.