UltraTech betters offer to Rs 16,189 crore from the earlier agreed Rs 15,900 crore; lenders ensured deal went through smoothly
Jaiprakash Associates and UltraTech Cement Ltd on Monday reiterated that the latter would buy the former's cement plants in five states with an aggregate capacity of 17.2 million tonne per annum (mtpa) along with a grinding unit of 4 million tonne per annum for Rs 16,189 crore.
UltraTech bettered its offer from the earlier agreed Rs 15,900 crore. It will also pay Rs 470 crore to complete the grinding unit in Uttar Pradesh.
Lenders to the debt-ridden Jaypee Group played a major part to ensure that the deal went through successfully.
UltraTech said a part of the deal would be through issuance of non-convertible debentures and preference shares worth Rs 4,625 crore. The assets being bought generated revenue of Rs 4,541 crore for the year ended March 31, 2016, it said in a stock exchange filing.
Manoj Gaur, executive chairman, Jaypee Group, said in a release, "The group is determined to reduce its overall debt through its proactive disinvestment initiatives to help the group tide through these turbulent times caused by economic slowdown."
Post the deal, Jaypee Group will retain 10.60 mtpa capacity cement plants spread in Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka.
Jaiprakash Associates had on March 31 signed an agreement for sale of its cement division to Aditya Birla-controlled UltraTech, which has a capacity of 21.2 mt in factories located across five states.
But that deal ran into disagreements when UltraTech wanted to change some contours of the deal, which was not acceptable to Jaypee Group and lenders.
A senior banker part of the consortium told dna, "Ultratech wanted to change the earlier agreement of March 31 so the lenders urged the Jaypee to look out for other buyers. But Ultratech said that it had a binding agreement with Jaiprakash Associates. When Jaypee group explored options for a new suitor, UltraTech even sent the lenders legal notices. We stuck to our guns as there is no one-way agreement binding two companies."
Jaiprakash Associates owes the consortium of banks around Rs 30,000 crore. There was a danger of the account slipping into a non-performing asset (NPA) as the 90-day window for repayment was coming to a close on June 30, the last day of the first quarter. "The consortium of lenders in their meeting of June 28 were forced to invoke a Strategic Debt Restructuring (SDR) on Jaiprakash Associates to prevent the company from slipping into NPA as payments from the company had not arrived at the end of the June quarter, as earlier agreed upon, due to the sale getting delayed, " said a banker privy to the discussions.
Noida-based Jaiprakash Associates is one of the big infrastructure developers in the region. It built the Yamuna Expressway that connects Delhi to Agra and India's only Formula One track. It has run up a total debt of about Rs 58,250 crore, of which Rs 30,000 is from banks. It sold two hydropower projects in Himachal Pradesh for Rs 9,275 crore last year.
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