Jaiprakash Associates (JAL) said it has received the approval of the shareholders to allow conversion of its debt into equity, with 88% of votes favouring the conversion.
In a regulatory filing, the company said shareholders of Jaiprakash Associates approved the “option to convert loans, debentures or other borrowings/debt of the company into equity shares/securities of the company”.
JAL owes more than Rs 30,000 crore to a consortium of lenders led by ICICI Bank. In last few months, JAL said it failed to meet its debt and interest payment commitments. The group had consolidated debt of around Rs 58,250 crore as of March 2016.
In a bid to pare debt, the firm in March had inked a deal with Ultratech Cement, which agreed to acquire its cement plants in Madhya Pradesh, Uttar Pradesh, Uttarakhand, Himachal Pradesh and Andhra Pradesh with total capacity of 21.20 million tonne per annum for Rs 16,189 crore.
In an earlier filing, JAL had said the recessionary trend in the construction/infrastructure sectors during the last few years, coupled with setbacks in timely monetisation of some of the assets of company, resulted in cash flow mismatch leading to some delays in honouring debt obligations.
Through strategic debt restructuring, banks can convert debt at a price below the current market value or an average of closing prices during ten trading days. They can now own at least 51s% of equity of the company. They have 18 months, from the date the SDR scheme is effective, to find a buyer, and should banks fail to usher in a new promoter, the asset would be classified as a non-performing one.