JAL lenders make new loan overhaul offer

NEW DELHI: Almost four years after the Reserve Bank of India (RBI) ordered bankruptcy action against Jaiprakash Associates (JAL), the parent company of Jaypee Infratech, the banks run by ICICI Bank have been slow to sue the case before the National Company Law Tribunal, amid further attempts to restructure the company’s loans.
A loan restructuring, for which a meeting of lenders will be called in the coming days, will bring relief to developers led by the Gaur family, who lost Jaypee Infratech, its gem that had a massive land reserve, stretching from Noida to Agra by highways. The proposal has been on the table for months, but so far lenders haven’t made much headway.

Even as lenders are deliberately structuring themselves, the company’s shares have been on fire in recent days, dropping from nearly 70% from Rs 8.86 on May 31 to nearly Rs 15, when they hit the market again. upper circuit of BSE. The volumes also increased, creating a new surprise in the market.
As the exchanges sought an explanation for the recent increase, JAL said it had made the required disclosures and was not aware of any reason.
While the buzz around a loan restructuring – which will require RBI clearance – is one of the triggers, a possible conversion of an FCCB would be the other reason for the rise. A higher price will again benefit the developers, who owned nearly 38.5% of the business. JAL was among the second group of two dozen companies fired by the RBI for insolvency resolution in 2017. Although several cases have been resolved, JAL has slowed down.
Banking sources, however, have said pushing through a restructuring, despite the behind-the-scenes maneuvering of at least one of the country’s major lenders, might not be easy.
For starters, the attempts to restructure lenders led by ICICI Bank come despite the Bank of Maharashtra seeking to declare the company, along with its promoters and directors, as willful defaults – a label that will deny them access to it. new financing of the banking system. In addition, there must be a rating from one of the agencies suggesting that the exercise will be sustainable for the account that turned into a non-performing asset several quarters ago.
In addition, the RBI will have to reconsider its own position after identifying JAL as one of the instances where lenders have been asked to seek bankruptcy action, including removing the current leadership as a first step.
In addition to being a majority stake in Jaiprakash Associates, a title it has lost, JAL has assets in the cement and electricity sectors.

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