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Business News/ Companies / Jaiprakash Power may default on FCCBs despite extension
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Jaiprakash Power may default on FCCBs despite extension

Firm says may need time to fulfil repayment obligations to holders of $200 million of convertible bonds

The announcement raises questions over whether the Jaypee Group continues to face a cash crunch despite efforts to sell assets.Premium
The announcement raises questions over whether the Jaypee Group continues to face a cash crunch despite efforts to sell assets.

Debt-laden Jaiprakash Power Ventures Ltd on Tuesday said it may need additional time, beyond 13 February, to fulfil its repayment obligations to holders of its $200 million foreign currency convertible bonds (FCCBs). This is the second time since January 2015 that the company has warned it may not be able to fulfil its repayment obligations to holders of the convertible bond.

The company’s board, at a meeting scheduled for Thursday, will discuss the possibility of signing a so-called standstill agreement with “a majority of the holders of outstanding FCCBs issued by the company", Jaiprakash Power said in the filing, adding, “... since the company may require additional time beyond February 13, 2016 to repay the FCCBs in full." The announcement raises questions over whether the Jaypee Group continues to face a cash crunch despite efforts to sell assets.

In March 2015, Jaiprakash Power had further extended the standstill agreement with bondholders up to 30 April 2015 for $200 million worth of FCCBs which were due on 13 February that year. As part of the proposed rescheduled payment agreement, the firm extended the maturity date of the FCCB to 13 February 2016.

The company completed the sale of its two hydropower projects to JSW Energy Ltd through a special purpose vehicle, Himachal Baspa Power Co. Ltd, on 1 September. “The proceeds from sale of aforesaid securities were utilised for reducing company’s debts including retirement of $75 million to FCCB holders," Jaiprakash Power said in a statement on 2 November.

The proposed repayment schedule included an upfront payment of $25 million and another $75 million on the receipt of the sale proceeds of the two hydropower plants. The remaining amount was due on 13 February 2016. Jaiprakash Power is also in talks with JSW Energy to sells its 500 megawatt Bina thermal power project in Madhya Pradesh.

The company will announce the results for the quarter ended 31 December on Thursday. On Tuesday, the company’s shares rose 4.36% to close at 5.98 per share, while the benchmark Sensex closed down 1.10% at 24,020.98 points.

At the end of September, Jaiprakash Power had long-term debt of 11,532.98 crore and short-term debt of 460.69 crore. The Jaypee Group’s cumulative debt is more than 60,000 crore.

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Published: 10 Feb 2016, 12:47 AM IST
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