Jaiprakash Associates transfers shares worth Rs 360 crore to ICICI Bank

In its attempt to reduce debt, Jaiprakash Associates (JAL) and its trusts have transferred about 189 million shares worth ₹360 crore to ICICI Bank under a settlement agreement. The shares transferred were already pledged with the bank, and the move comes ahead of the next hearing of the bankruptcy petition on November 30.

This is to give a thrust to the ongoing efforts to reduce debt, JAL, the flagship company of the Jaypee Group, said in a regulatory update.

Apart from JAL, trusts such as GACL Trust, JEL Trust, JCL Trust and JHL Trust were part of the settlement agreement.JAL owes nearly ₹29,000 crore, which includes principal and interest, to 30 banks, including State Bank of India, ICICI Bank, IDBI Bank and others. Of this, its exposure to ICICI Bank is at about ₹3,000 crore.

Now, following the settlement agreement, JAL’s exposure to ICICI Bank would fall to ₹2,640 crore. “The bank has already made provisions for this exposure, so this ₹360 crore will be counted as recovery for the bank,” a source close to the development told FE. However, the company’s insolvency proceedings would continue before the National Company Law Tribunal (NCLT.

JAL’s promoters hold 37.7% stake in the company, of which 20.46% was pledged as of September 30, 2023. The company had posted a total operating income of ₹3,955 crore on a standalone basis as of FY23.

On November 6, JAL said it had defaulted on a borrowing of ₹4,258 crore from banks and financial institutions. It had defaulted on payments earlier also, including loans worth ₹4,044 crore as of June 30.

JAL was part of a list of stressed accounts shortlisted by RBI for insolvency proceedings in 2018. The firm is facing proceedings under the Insolvency and Bankruptcy Code initiated by ICICI Bank and State Bank of India at NCLT’s Allahabad bench.

Dalmia Cement (Bharat), a subsidiary of Dalmia Bharat, had earlier entered into agreements to acquire JAL’s JP Super Cement Plant in Uttar Pradesh at an enterprise value of Rs 1,500 crore and costs and expenses of up to Rs 190 crore. However, the deal is yet to be concluded as it is expecting regulatory approvals.