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Jaypee restructures outstanding FCCBs with Goldman Sachs, Deutsche Bank

MUMBAI: The Jaypee Group has restructured its outstanding fo..

MUMBAI: The Jaypee Group has restructured its outstanding foreign currency convertible bonds (FCCBs) after renegotiating with investors, including marque Wall Street names like Goldman Sachs and Deutsche Bank.

The deal allows the cash-strapped infrastructure conglomerate to delay its debt obligation by about four years, giving it more room to meet immediate liabilities arising out of ongoing legal battles, said people in the know. Jaiprakash Associates, the holding company, had sold $150 million of FCCBs in 2012 with a five-year maturity. These bonds were convertible at Rs 77.50 per share. But, the company could not pay interest since March 2016.

International investors including Bluebay, Clearwater and CIC France had also invested in the securities.

While Goldman and Deutsche Bank declined to comment on the matter, others could not be contacted immediately. Jaypee did not comment on individual investors.

"Investors continue to repose our faith on our company, backed by quality assets and seeing the intent of the promoters who are leaving no stone unturned to discharge all their obligations towards all stakeholders," JP Group managing director Suren Jain told ET.

"The restructuring of FCCB in Jaiprakash Associates is evident of such investor confidence on us. This has helped us extend our debt obligation by another three-four years."

The company has been exchanging old FCCBs with two new series of similar bonds. The FCCBs had $110 million of principal outstanding and unpaid interest of $12.3 million. Jaypee paid 25% of the principal outstanding ($27 million) upfront. For the remaining, it issued two separate series of bonds maturing in September 2020 and 2021.

Investors can earn interest income on those two sets of papers at 4.76% and 5.75%, respectively, payable quarterly. These bonds are listed on the Singapore Stock Exchange. "It has never been the intention of the group to short-change any investor, whether secured or unsecured," said Jain.

The series maturing in 2020 amounting to $81.7 million has no conversion option and will be repaid in quarterly instalments starting March this year. The series maturing in 2021, totalling $38.64 million, has a conversion option at Rs 27 per share.

However, if not converted, this series will be repaid in quarterly instalments starting December 2020.

The payment of the principal is usually in the currency in which the money is raised.

"The retail fixed deposit holders (unsecured creditors) have been paid off fully in July 2017 using the sales proceeds of cement units to UltraTech Cement," Jain said.

A convertible bond is a mix between a debt and equity instrument. Jaiprakash Associates reported total debt of Rs 5,586 crore in the end of September 2017, compared with Rs 27,729 crore at the end of March 2017. Cash from asset monetisation in the past, including Rs 16,000 crore from the cement asset sale, helped, allowing the company to bring its debt to equity to 0.5 from almost 4 just six months ago. Its subsidiary, Jaiprakash Infratech that owns road projects including the Yamuna Expressway and real estate assets, has debt of Rs 8,487 crore and is struggling to meet its obligation.

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