Jaiprakash Power Ventures on Wednesday said it may not be able to redeem convertible bonds worth $200 million due on February 13 that it had issued in 2010. Attributing its inability to honour its commitment to insufficient revenues from its power projects and cash balances, JPVL said it was confident it would be able to pay the amounts on or before March 31, 2016. The bonds carry a coupon rate of 5% and a redemption premium of 16.5%. Bloomberg data showed the company had a standalone net debt of R17,496 crore at the end of September 2014.
Analysts said JPVL will probably ask bondholders at a February 2 meeting in Hong Kong to give it a year’s grace period as it awaits cash receipts from the proposed sale of its hydropower assets Karcham and Baspa-II.
They pointed out that with the company not having hedged its foreign currency liabilities, the repayment amount had risen sharply — while the dollar in 2010 was valued at Rs 46.50, it has since depreciated to levels of Rs 61.36, a fall of 32%.
On November 16, JPVL entered into an agreement with the Sajjan Jindal-promoted JSW Energy to sell the two plants for an enterprise value of approximately Rs 9,700 crore. Along with the two power units, debt to the tune of Rs 5,800-6,000 crore was also to be transferred to a special purpose vehicle.
Bloomberg lists UBS Institutional Fund Management, Bluebay Asset Management, BNP Paribas and UBS Strategy among the bondholders. On Wednesday, the bond was trading at 108.935 dollars on the Singapore Stock Exchange. The conversion price agreed to for the bonds was Rs 85.8139 per share; had all bonds been converted they would result in 10.7 crore shares. On Wednesday the JPVL stock closed 1.6% lower at Rs 11.67 on the BSE.
In the six months to September, JPVL reported revenues of Rs 1,986 crore and a net profit of Rs 369 crore. In FY14, the company posted revenues of Rs 2,874 crore and net profit of Rs 72.9 crore. JPVL also owns the Bina thermal power plant.
Given the lack of fuel linkages for its thermal power plant, the unit has not been able to operate at optimum capacity. JP Power said in the statement that the Supreme Court’s decision to cancel the coal blocks has been a critical issue. “The company today is facing the difficult challenge of high leverage and is taking all measures possible to fulfil its commitment of providing maximum value to all its stakeholders,” it said in a statement.