ICICI Bank recovers Rs 366 crore from troubled builder JP Associates

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In a bid to reduce its debt burden, troubled builder Jaiprakash Associates has entered into an agreement with ICICI Bank to transfer 18.9 crore shares to the lender, which were pledged with the bank. This will result in the recovery of around Rs 366 crore for the bank, considering the last closing price of its shares.


“…with a view to give thrust to the ongoing efforts of the Company to reduce its debt, the Company, along with Trusts holding 18,93,16,992 Equity shares of the Company, have entered into a Settlement Agreement with ICICI Bank (Lender) to transfer the said shares to Lender,” JP said in a filing to the exchanges.


“The value/consideration of the said shares shall be arrived at based on the closing price at the National Stock Exchange of India Limited on the day prior to the actual transfer of shares to the demat account of the Lender,” the exchange notification said.


At the closing price of Rs 19.35 of JP Associates’ stock price, these shares would amount to Rs 366 crore. As a result, this transaction will result in the recovery of Rs 366 crore for ICICI Bank. The private sector lender has an exposure of Rs 3,000 crore to JP Associates – for which the bank had made full provision.


On November 6, JP Associates, the flagship of the Jaypee group, said it had defaulted on loans as of October 31, totalling Rs 4,258 crore – including principal and interest.


The total borrowing (including interest) of the company is Rs 29,272 crore, repayable by 2037, against which only Rs 4,258 Crore is overdue as of 31.10.2023, JP had said in a notification to the exchanges. Lenders to JP included the State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, ICICI Bank, Axis Bank, among others. The loans were fund-based working capital, Non-Fund based working capital, Term loans, and FCCB. JP had said it is taking tangible steps to reduce debt.


“As a responsible borrower, the Company has been taking tangible steps to reduce the borrowings. Post the proposed divestment of the Cement Business and the restructuring under consideration, the borrowing will get almost to nil upon implementation of the revised restructuring plan,” the company said in the November 6 exchange filing.


The development comes amid lenders initiating insolvency proceedings against the builder. In September, the country’s largest lender State Bank of India (SBI) moved the National Company Law Tribunal initiating insolvency proceedings against the company. ICICI Bank had also filed a similar petition in September 2018.