JBF Industries in talks for strategic stake sale
Mumbai: JBF Industries Ltd is in discussions with potential buyers for a stake sale which could lead to a change of management control in the Mumbai-based polyester maker, two people aware of the development said.
The talks are being helmed by private equity fund KKR, which owns close to 20% in the company along with a part of the company’s debt, the people cited above said on conditions of anonymity. The talks are currently underway with Indorama group, Reliance Industries Ltd (RIL) and The Chatterjee Group (TCG), they said.
Of the three suitors, Indorama and TCG have begun the due diligence process on the company, the people cited above said, adding “There is, however, no certainty that a deal will eventually happen but the current interest of strategic buyer hinges on the fact that management control will pass on to them from the current promoters; the Arya family which holds close to 43.18% stake in the company.”
A spokesperson for KKR declined requests for comment while emails sent to JBF, Indorama and TCG remained unanswered till press time.
A RIL spokesperson said: “We do not comment on market speculations.”
Established in 1982, JBF Industries was founded by Bhagirath Arya as a yarn texturizing company, and currently manufactures polyester value-chain products ranging from polyester chips, polyester yarn and films, which are used in the fast-moving consumer goods, textile and packaging industries. JBF Group has six manufacturing facilities across India, Bahrain, Belgium and the United Arab Emirates.
In July, Care Ratings downgraded the company to D or Default after it began delaying servicing of its domestic debt on account of weakened liquidity position due to losses in overseas operations, total debt remaining at elevated levels and other operational delays in production.
JBF’s total consolidated debt was at Rs10,848.53 crore as of March 2017.
In August, a Reuters report said that JBF RAK, the UAE subsidiary of JBF Industries, is in talks to sell its plant in Belgium for up to €250 million ($298 million) in an effort to settle part of its debt. The report added that the sale is one of a number of moves under discussion between the company and banks as JBF RAK seeks to re-negotiate around 2 billion dirhams ($545 million) in debt.
Another report in the Economic Times in the same month said that there were concerns around a potential default of JBF’s overseas debt. The company denied any instance of default in its overseas subsidiaries.
JBF is among the top 10 producers of PET (polyethylene terephthalate) chips and BOPET (biaxially-oriented polyethylene terephthalate) films globally. On a consolidated basis, JBF reported a loss of Rs390 crore on a total income of Rs9,390 crore in FY17 compared with a loss of Rs225 crore on a total income of Rs9,236 crore in the previous year.
All the potential suitors of JBF have large petrochemicals businesses.
RIL, the largest among them, acquired Vadodara-based Kemrock Industries and Exports Ltd in September to enter the composites business. The acquisition is expected to strengthen RIL’s petrochemicals business portfolio while paving the way for its foray into new materials (composites and carbon fibre).
Indorama group is a Bangkok-based chemicals maker controlled by the Lohia family. Mint reported in April that the group was in exploratory talks with The Chatterjee Group (TCG) to buy a stake in Haldia Petrochemicals Ltd (HPL). TCG, promoted by non-resident Indian businessman Purnendu Chatterjee, owns close to 48% in Haldia Petrochemicals.