Millennium Post

ICICI Bank leads largest ever stressed asset resolution

Consortium achieves this during Ultratech’s ₹16,189 cr takeover of Jaypee Cements

ICICI Bank on Thursday said that a lenders consortium led by it has concluded the biggest asset resolution in the country with consummation of the Rs 16,189 crore takeover of Jaypee Cements by Ultratech.

"This is the largest asset resolution in the country so far and I hope that this landmark transaction will pave the way for more such resolutions," Chanda Kochhar, ICICI Bank managing director and chief executive, said in a statement.

She said the sale process of the cement business of Jaiprakash Associates and Jaypee Cement Corporation to the Birla group's UltraTech Cement "has been concluded on Thursday."

Even though the exact gain to the lenders is not mentioned in the statement, a March 2016 media report had pegged banks would receive about Rs 4,000 crore from sale.

ICICI Bank was the lead bank in the lenders' consortium and played a "significant role" in the sale process, Kochhar said.

She said a decision to to reduce Jaiprakash Associates and Jaypee Cement's debt was taken more than a year ago and its subsidiary ICICI Securities was appointed to manage the sale process.

"ICICI Bank has played a significant role through this entire process, enabling successful completion of this transaction," she said.

The bank said the transaction is significant because a part of the debt of Jaiprakash Associates and Jaypee Cement has been transferred from a stressed account to an AAA-rated new company.

On March 31, 2016, UltraTech, the largest cement company in the had announced its intension to take over the troubled JP Cement for Rs 15900 crore and ealier this year the valuation was increased to Rs 16189 crore. Birla group chairman Kukar Birla had on March 1 this year expressed hope that the sale process would be completed by June. The deal will take the Birla firm's capacity to over 91 mtpa, as the Jayepee deal will increase its capacity by 21.2 million tonne per annum while it help the JP group pare its debt pile.

The transaction excludes the 1.2-million tonne plant in Karnataka. The Jaiprakash Associates had debt of alarmingly high Rs 60,000 crore and the deal was forced by the lenders. Post-Birla deal, Jaypee will continue to have 10.6 mtpa cement capacity in MP, UP, Andhra, and Karnataka. Many banks had to take a hit with provisions in Q4 of FY17 due to the deal not going through and had expected a write-back with the conclusion of the sale process.

The announcement comes a week within banks clearing the Rs 86,000 crore Rosneft-Essar Oil deal which will also help banks. The Essar Oil owed more than Rs 26,000 crore in debt to 23 lenders led by SBI apart from a Rs 1290 crore to LIC.

The ICICI Bank scrip closed 0.95 percent up at Rs 293.70 on the BSE, whose benchmark ended the session with a marginal gain of 0.08 per cent.

10K cr dues: SBI files insolvency case with NCLT against Electrosteel

New Delhi: Consortium leader SBI has initiated insolvency proceedings before NCLT against Kolkata- based Electrosteel Steels to recover Rs 10,000 crore in loans as bankers tighten screws on big corporate defaulters.

The company said in a regulatory filing that State Bank of India has initiated the corporate insolvency resolution process and filed the documents with NCLT, Kolkata, against it under the Insolvency and Bankruptcy Code (IBC), 2016.

The action follows the meeting of lenders to the company on June 22 to work out resolution mechanism, it said.

For the fourth quarter ended March 31, 2017, Electrosteel Steels had reported a net loss of Rs 293.33 crore as against net profit Rs 265.14 crore in the year-ago quarter. The lead banker to defaulters like Bhushan Steel and Essar Steel, SBI had said last week that the default cases would be referred to the NCLT for recovery under the IBC. While Bhushan Steel is in default of Rs 44,478 crore to banks, Essar Steel owes Rs 37,284 crore. Electrosteel Steels owes Rs 10,273.6 crore.

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