The remaining Rs 1,200- crore unsustainable debt will be converted into debentures, payable after eight years at 0.01% interest.
By Ankur Mishra
State Bank of India (SBI), the lead creditor to Jain Irrigation Systems (JISL), is likely to consider a Rs 4,000-crore debt restructuring plan for the company next week, sources close to the development told FE. According to the restructuring plan, of the Rs 4,000-crore debt, Rs 2,800 crore will be converted into a sustainable portion, payable at 8.5% interest to lenders. The remaining Rs 1,200- crore unsustainable debt will be converted into debentures, payable after eight years at 0.01% interest. The lenders will also get 15% stake in Jain Irrigation after the restructuring, said sources.
The plan has been drafted in consultation with lead lender SBI, the source added. “The lenders will now approve the restructuring plan at individual board levels, SBI may consider approving the plan next week,“ a senior bank official told FE. The committee of creditors (CoC) will take up the plan for approval after clearance from individual bank boards.
Lenders had earlier signed an inter creditor agreement (ICA) for resolving JISL in accordance with a June 7 circular of the Reserve Bank of India. Rating firms have downgraded the company due to delay in servicing debt. While S&P has downgraded it to ‘D’ (default grade) for missing interest payments due on February 1, Care Ratings had downgraded it to ‘D’ last year due to a delay in servicing debt.
The company reported a net loss of Rs 228 crore in the March quarter, against Rs 82.3 crore net profit during the same period last year. The revenues saw 72% year-on-year (Y-o-Y) decline in the March quarter to Rs 3,825 crore, compared to Rs 13,346 crore in March 2019. The company had attributed significant drop in revenue to Covid-19 and liquidity tightening.
Earlier this month, speaking after March quarter earnings, vice-chairman and MD Anil Jain said, “The debt resolution was initiated in second quarter of the year 2019-20, and we have progressed a lot on the path towards debt resolution plan and are now in final stages subject to approvals from lenders.”