Jain Irrigation lenders staring at 30% haircut

By Ankur Mishra

Jain irrigation lenders are starring a 30% haircut on Rs 4,000 crore debt restructuring plan presented by the promoters, which is expected to be implemented by the end of March. Of the Rs 4,000 crore debt, Rs 2,800 crore will be converted into a sustainable portion, payable at 9% interest to lenders. The remaining Rs 1,200 crore unsustainable debt will be converted into debentures, payable after eight years at 0.01% interest. The lenders will also get a 15% stake in Jain Irrigation after the restructuring, said sources. State Bank of India (SBI) is the lead creditor to Jain irrigation.

The management of Jain Irrigation is expecting the resolution process to be completed by the end of March. In an interaction with analysts after December quarter earnings (Q3FY21), Anil Jain, vice chairman and managing director (MD) of the company said, “As we speak, the plan is to take this through board of the banks of the lenders, which is supposed to happen let’s say end of February, early March. And then the resolution plan gets signed after that.

So, based on our discussions with the lenders, everybody is targeting that we should get done by March 31 2021.”
Lenders had earlier signed an inter creditor agreement (ICA) for resolving Jain Irrigation in accordance with a June 7,2019 circular of the Reserve Bank of India (RBI). Rating firms had downgraded the company due to delay in servicing debt. Last year, S&P had downgraded it to ‘D’ (default grade) for missing interest payments due on February 1, 2020. Similarly, Care Ratings had downgraded Jain Irrigation to ‘D’ in 2019 due to a delay in servicing debt.

Cash-strapped Jain Irrigation Systems narrowed its loss during the December quarter (Q3FY21) to Rs 123 crore, compared to Rs 284 crore in the same quarter last year. Earnings before interest, taxes, depreciation and amortisation (EBITDA) moved into the black at Rs 122 crore in Q3 FY21 from negative Rs 82 crore in Q3 FY20. Consolidated revenues rose 10% y-o-y (year-on-year) to Rs 1,428 crore from Rs 1,300 crore in the comparable period last year.