Lenders to Jyoti Structures — a manufacturer of transmission line towers — are planning to convert a large portion of their loans into equity or, in other words, effect a strategic debt restructuring (SDR), two bankers aware of the development told FE.
One of them confirmed the consortium of 21 lenders had discussed the conversion modalities and that the company had agreed to an SDR. “There is a meeting next week where it could be finalised,” he said. The consortium is led by State Bank of India (SBI), which has an exposure to the company of Rs 1,228 crore.
The company’s share on Wednesday fell 9.72% to close at Rs 13 on the BSE. The stock has lost 53% in the last one month.
Jyoti Structures reported a net loss of Rs 152 crore in the three months to June partly due to interest costs of R158 crore. In FY15, the Mumbai-based firm had posted a net loss of Rs 396 crore on the back of Rs 3,111 crore in revenues with interest expenses almost doubling to Rs 426 crore. Bloomberg data show that gross debt at the end of March 2015 was Rs 2,356 crore, up from Rs 1,563 crore at the end of March 2014.
The firm’s 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%).
An email sent to the company seeking comments remained unanswered and it could not be immediately ascertained if lenders have any buyers lined up.
In its FY14 annual report, the company had blamed the delay in disbursement of working capital by lenders for the stress on cash flows. “The company has been facing significant lag in sanction and release of assessed working capital facilities which resulted in stress in cash flow, delay in project execution, delay in realisation leading to engorgement of debtors,” it had said.
It had added that the scenario was challenging for the transmission and distribution segment and overall, the business environment is expected to remain challenging in the near future with pricing pressure on margins. “Project execution and completion is another area of concern as most of the transmission projects face delay because of developer’s inability to get right of way and get timely clearances from authorities like forest, aviation, defence and railway,” it had said.
According to the SDR rules banks can convert debt at a price below the current market value or an average of closing prices during the 10 trading days before the JLF decision. They can now own up to 51% of the equity of the company.