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Business News/ Companies / Jaypee Group to review divestment, SDR plans today
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Jaypee Group to review divestment, SDR plans today

The board meets at a time when Jaypee Group's key divestmentselling its cement business to Ultratechhas run into a snag

The deal with Ultratech was largely driven by the lenders of Jaiprakash Associates to help reduce their exposure to the infrastructure conglomerate. Photo: BloombergPremium
The deal with Ultratech was largely driven by the lenders of Jaiprakash Associates to help reduce their exposure to the infrastructure conglomerate. Photo: Bloomberg

Mumbai: The board of debt-laden Jaypee Group will meet Monday to review the progress of its divestment plans and related matters, including lenders invoking strategic debt restructuring or SDR.

The board meets at a time when Jaypee Group’s key divestment—selling its cement business to Ultratech Cement Ltd for 15,900 crore—has run into a snag over its failure to meet some commitments linked to the transaction.

The deal, however, has not been called off yet and efforts are underway to salvage it.

The sale is crucial for Jaiprakash Associates, which is seeking to reduce debt by raising money through asset sales. As of 31 March, Jaiprakash Associates had consolidated debt of 58,250 crore.

In a filing to the BSE, Jaypee Group said the Joint Lenders Forum (JLF) meeting was held to review the progress made so far on the Corrective Action Plan approved by the lenders in January 2015 and had agreed for invocation of SDR taking 28 June 2016 as the reference date, subject to approval of lenders.

“Further, the company has informed that a meeting of the Board of Directors of the Company is scheduled at a short notice on July 04, 2016 inter alia, to review the progress of the divestment plans and other related matters," the company said in its filing.

The deal with Ultratech was largely driven by the lenders of Jaiprakash Associates to help reduce their exposure to the infrastructure conglomerate.

“At the beginning of this financial year, banks had put up a proposal to the Reserve Bank of India (RBI), where they had said that UltraTech would pay for the deal upfront and this money would be held in a separate bank account, giving lenders the assurance to continue with a standard asset classification on JP Associates Ltd’s account. However, the regulator was not happy with the idea and asked banks to follow classification norms strictly," said a person close to the deal, seeking anonymity as the details are confidential.

According to a public sector banker, who also spoke on condition of anonymity, Ultratech also attempted to renegotiate some aspects of the deal, which was not acceptable to the consortium.

“We decided that this needed some more time, so that it doesn’t seem like a desperate sale. SDR would allow for some more time to find a new buyer, if needed," the banker mentioned above said.

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Published: 04 Jul 2016, 10:52 AM IST
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