SBI New York sells entire loan exposure in Jyoti Structures’ US unit
Mumbai: State Bank of India New York (SBI New York), a subsidiary of the nation’s largest lender, has sold its entire loan exposure in the US unit of Jyoti Structures Ltd for an undisclosed sum, two people directly aware of the development said.
According to the persons cited above, the transaction took place sometime last month. Although the value of the transaction could not be immediately ascertained, the persons cited above said SBI has taken a significant haircut on the outstanding loans of around $30 million, which were sold to a financial entity backed by Falcon Steel America, a US-based manufacturer of power transmission towers, said the people cited above, speaking on condition of anonymity.
With this, SBI New York, which had restructured Jyoti Americas Llc’s loans in 2014, has completely exited the firm before its parent goes into bankruptcy proceedings in India. Meanwhile, Jyoti Americas, according to the persons cited above, will also file for chapter 11 bankruptcy under the US law to effect a change of ownership.
An email sent to Falcon Steel on Wednesday remained unanswered as of press time, while a State Bank of India spokesperson declined to comment on the matter, citing client confidentiality.
Commissioned in 2012, Jyoti Americas is based in Conroe, Texas, where it has a manufacturing facility built with an initial capital expenditure of close to $100 million.
The company is one of the largest manufacturers of lattice transmission towers in the US and also provides tower testing and engineering services.
The firm has been facing financial distress for the past few years. In 2013, AION Capital Partners invested close to $23 million in structured credit in Jyoti Americas, renewing hopes of its revival.
According to the persons cited above, the decision to sell the loans of Jyoti Americas was taken earlier this year after lenders to its parent failed to find a suitor for the struggling company. Jyoti Structures’ lenders had invoked the Reserve Bank of India (RBI)’s strategic debt restructuring (SDR) norms in 2015 and restructured its debt outside the provisions of SDR.
Since then, banks have been trying to sell their 51% stake in the company without success. Talks with potential buyers which include Kalpataru Power Transmission Ltd, Essel Infrastructure, Simplex Infrastructures Ltd, KEC International Ltd and Transrail Lighting Ltd remained inconclusive despite some initial interest.
On Tuesday, the National Company Law Tribunal approved bankruptcy proceedings for Jyoti Structures, making it the first among the 12 cases referred by RBI to go for resolution under India’s new Insolvency and Bankruptcy Code.