JAL lenders make fresh loan recast bid

NEW DELHI: Nearly four years after the Reserve Bank of India (RBI) ordered bankruptcy action against (JAL), the parent of , banks led by have been slow in pursuing the case in the National Company Law Tribunal, amid fresh attempts to restructure the company’s loans.

A loan restructuring, for which a meeting of lenders will be convened over the next few days, will provide relief to the promoters led by the Gaur family, which has lost Jaypee Infratech, its crown jewel that had a massive land bank, running from Noida to Agra along expressways. The proposal has been on the table for months but so far the lenders have failed to make much headway.
Even as lenders deliberate are structuring, the company’s stock has been on fire in recent days, surging almost 70% from Rs 8.86 on May 31 to nearly Rs 15, when it again hit the upper circuit on the BSE. Volumes too have shot up, creating fresh surprise in the market.

While the exchanges had sought an explanation for the recent rise, JAL said it had been making the requisite disclosures and was not aware of any reasons.

While the buzz around a loan restructuring — which will need a clearance from RBI — is one of the triggers, a possible conversion of an FCCB is said to be the other reason for the rise. A higher price will again be beneficial to the promoters, who owned nearly 38.5% in the company. JAL was among the second batch of two dozen companies referred by the RBI for insolvency resolution in 2017. While several cases have been resolved, JAL has been slow off the blocks.

Banking sources, however, said that pushing through a restructuring, despite backroom manoeuvres by at least one of the top lenders in the country, may not be easy.

To begin with, the restructuring attempts from lenders led by ICICI Bank comes despite seeking to declare the company, along with its promoters and directors, as wilful defaulters —a tag that will deny them access to fresh funding from the banking system. Besides, there has to 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.

Further, the RBI will have to reverse its own position after having identified JAL as one of the cases where lenders were asked to push for bankruptcy action, including removal of the current management as the first step.

Apart from being the majority owner of Jaiprakash Associates, a title that it has lost, JAL has assets in the cement and power sectors.