Billionaire Sajjan Jindal-led JSW Energy Ltd is taking an equity stake in Jaiprakash Power Ventures Ltd as part of an exercise to restructure its loans to the debt-laden company.
Jaiprakash Power owes a principal amount of Rs 751.77 crore to JSW Energy and will convert Rs 351.77 crore of this debt into equity shares at par value of Rs 10 each, the two companies said in stock-exchange filings.
Out of the balance amount, JSW Energy will write off Rs 280 crore while Jaiprakash Power will repay Rs 120 crore quarterly out of its cash flows.
JSW Energy also said that it had made a provision for Rs 574.19 crore in the quarter ended March 31, 2018 for the writeoff and the debt restructuring.
The two companies have also agreed to waive their respective rights to receive any payments from each other in relation to a 2014 deal for the sale of Karcham and Baspa hydro power plants by Jaiprakash to JSW. This will result in reversal of an amount of Rs 177.48 crore of liabilities payable to Jaiprakash Power in JSW’s books, the filings said.
Jaiprakash Power, part of the Manoj Gaur-led Jaypee Group, had taken a term loan of Rs 1,000 crore from Axis Bank. The bank disbursed the loan based on a corporate guarantee given by JSW Energy. Later, JSW Energy repaid the loan on behalf of Jaiprakash Power to Axis Bank. Against this loan, Jaiprakash Power owed Rs 751.77 crore to JSW Energy.
Jaiprakash Power will issue 35.2 crore shares of a face value of Rs 10 each on a preferential basis to JSW Energy. This would mean JSW Energy will pick up a 5.5% stake in Jaiprakash Power, according to VCCircle estimates. This stake would be worth Rs 63.36 crore based on Jaiprakash Power’s share price of Rs 1.80 apiece.
Meanwhile, ICICI Bank had filed a bankruptcy petition against Jaiprakash Power in September 2018. But the petition is yet to be admitted in bankruptcy court because a lenders' consortium led by ICICI Bank and State Bank of India have been trying to resolve the debt outside of the insolvency process.
For the quarter ended September 2019, Jaiprakash Power’s net loss widened to Rs 161.45 crore from Rs 41.86 crore a year earlier.
The total debt of the company as on March end 2019 stood at over Rs 13,288 crore, as per its annual report 2018-19
Jaiprakash Power owns three power projects – the 400 megawatt Vishnuprayag hydroelectric project, the 1320 MW Nigrie thermal project and the 500 MW Bina thermal project. While both Vishnuprayag and Bina are doing well, Nigrie has the largest debt of Rs 7,000 crore and got into financial trouble after its coal mine was cancelled.