Jaiprakash Power Ventures seeks shareholders approval to convert Rs 300 crore debt to equity

Jaiprakash Power Ventures has sought shareholders consent, through postal and electronic ballot, to convert part of its outstanding debt of Rs 3,058 crore into 305.80 crore equity shares.

After this issue, total public shareholding of the company will increase from 36.40 per cent to 68.84 per cent, which includes 51 per cent equity with lenders whose debt would be restructured, a company filing to BSE said on Monday.

"A portion of the outstanding amount of debt (including unpaid interest) amounting to Rs 3,058 crore payable to such lenders by the company is converted into 305.80 crore equity shares of Rs 10 each (at a price determined in accordance with RBI circular," the company's proposal to shareholders said.

The result of the postal as well as electronic ballot will be declared on February 11, 2017. The company had availed assistance from various banks/financial institutions.

Owing to various factors such as lack of visibility of new power purchase agreement (PPA) for 1,320 MW Jaypee Nigrie Power Plant and delay in signing of PPA, low off-take by discoms and abnormal decline in merchant tariffs, lower generation of power by 500 MW, Jaypee Bina Thermal Power Plant has adversely impacted the operations of the company leading to decline in operating profits and liquidity constraints, it said.

The company could not pay the outstanding overdues to lenders in a timely manner due to above mentioned reasons.

The Lenders had formed a Joint Lenders Forum (JLF) and formulated a Corrective Action Plan (CAP) for the company in order to resolve the stress on its financial state.

However, it stated that the company could not perform satisfactorily under the CAP due to various factors.        

Therefore, the JLF had finally decided to invoke the provisions of Strategic Debt Restructuring (SDR) on July 25, 2016.At the JLF meeting held on December 21, 2016, it was decided that the banks and financial institutions would convert a portion of respective debt of each of such bank and  financial institution, allocated to them into equity so that they shall, post conversion, collectively hold 51 per cent of the fully paid up equity share capital in the company amounting to Rs 3,058 crore divided into 305.80 crore shares of Rs 10 each or such number as might be required to be issued.

The company also said that consequent to the issue and allotment of equity shares, Lenders shall have the right to divest their holdings in the equity shares to new promoter(s).

It may be noted that on implementation of full resolution plan, there will not be any change in management or control and the existing management of the company shall continue hitherto.