Mumbai: Billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) has emerged as the sole contender to acquire a part of polyester maker JBF Industries Ltd’s operations in a transaction that will include its entire overseas operations and an upcoming plant in Mangalore, two people directly aware of the ongoing negotiations said.
Mint had reported on 18 October last year that JBF Industries was in discussions with at least three potential buyers, including RIL, for a stake sale which could lead to a change of management control. The talks were being helmed by private equity fund KKR, which owns close to 20% in the company along with a part of the company’s debt, Mint had reported. Apart from RIL, the Indorama group and The Chatterjee Group (TCG) had also shown initial interest in JBF and conducted a due diligence of the assets, Mint had reported.
“The contours of the deal have changed since the discussions commenced," said one of the two people cited above, requesting anonymity. “If the transaction goes ahead, RIL will acquire a controlling stake in the Singapore subsidiary of JBF, which owns the overseas assets and the Mangalore PTA plant, while the domestic operations of JBF group will remain with the promoters of the company".
JBF Industries was founded by Bhagirath Arya as a yarn texturising company in 1982. Since then it has expanded capacities in the polyester value chain.
JBF group is the second-largest manufacturer of textile-grade chips and third-largest producer of partially-oriented yarn and biaxially-oriented polyethylene terephthalate (BOPET) chips and films domestically. Additionally, JBF group is among the top 10 BOPET chip and film producers globally through its foreign subsidiaries that include JBF RAK LLC, JBF Global Europe BVBA and JBF Bahrain SPC. JBF group has six manufacturing facilities across India, Bahrain, Belgium and the United Arab Emirates.
JBF group is also commissioning a 1.25 MMT per annum capacity PTA (purified terephthalic acid) plant, which will be amongst the largest of its kind in India. For the PTA project, which will cost up to $750 million, JBF has raised external commercial borrowings (ECBs) of $464 million and received investment from private equity firm KKR, which has invested $150 million to complete the project.
While requests for comment sent to the JBF Industries remained unanswered until press time, a KKR spokesperson declined to comment. An RIL spokesperson said: “As a policy, we do not comment on media speculation and rumours". “Our company evaluates various opportunities on an ongoing basis". “We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India’s (Sebi) regulations and our agreements with the stock exchanges."
In July last year, JBF began delaying servicing of its domestic debt on account of weakened liquidity position due to losses in overseas operations, higher finance costs 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, was 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 said that the proposed sale was one of a number of moves under discussion between the company and banks to renegotiate around 2 billion dirhams ($545 million) in debt.