National Asset Reconstruction Company of India (NARCL) has proposed to acquire the debt of Jaiprakash Associates from banks for ₹10,000 crore, making it the largest offer made so far by the government-backed asset reconstruction company (ARC) that started operations just over two years ago.
If a majority of lenders sell their debt, ARC will acquire the cement, hospitality, real estate, fertiliser and construction businesses of Jaiprakash Associates Ltd (JAL) – a flagship company of the Manoj Gaur-promoted Jaypee Group, said people with knowledge of the matter.
In fiscal 2023, NARCL acquired 62%, or ₹9,234 crore, of Jaypee Infratech’s debt, offering lenders a 39% recovery following an uncontested Swiss challenge auction.
In the case of JAL, State Bank of India has the largest debt hold at 26%, followed by ICICI Bank at 19% and IDBI Bank at 11%. The company has total principal outstanding debt of ₹17,700 crore as of March 2023. This includes ₹650 crore that Ares SSG Capital-backed Asset Care & Reconstruction Enterprises (ACRE) acquired from Yes Bank and Karnataka Bank.
The people said NARCL’s ₹10,000 crore offer excludes the debt held by ARCE.
NARCL did not respond to ET’s request for comment.
The government-backed ARC has been on an acquisition spree over the last three months and this would be the largest account among them. It has acquired or is in the process of acquiring at least a dozen distressed loan accounts, as reported by ET on March 8.
Jaiprakash Associates is among the 28 accounts the Reserve Bank of India directed banks to resolve under the Insolvency and Bankruptcy Code in 2017. IDBI Bank initially applied for resolution at the National Company Law Tribunal, and in September 2022, SBI filed a separate petition. The NCLT has yet to admit the pleas, while the promoter is negotiating an out-of-court settlement with lenders.
Jaiprakash Associates is the original promoter of Jaypee Infratech, which entered into insolvency resolution process in 2017. In the last hearing on February 19.
