Jaiprakash Associates (NS: JAIA ) Ltd has announced a significant step in its efforts to reduce its substantial debt burden. The company revealed a Settlement Agreement with ICICI Bank (NS: ICBK ) that will involve transferring 18.93 crore shares at a value based on the previous day's closing price on the National Stock Exchange of India Limited. This move is part of a broader restructuring plan, which includes the divestment of its Cement Business and is anticipated to lead to a notable increase in the company's stock value.
On October 31, 2023, Jaiprakash Associates was facing an overdue debt of ₹4,258 crore (INR100 crore = approx. USD12 million). To address this challenge, the company has embarked on an extensive restructuring strategy. A key element of this plan is the creation of a Special Purpose Vehicle (SPV) to which ₹18,682 crore of debt will be transferred, pending sanction from the National Company Law Tribunal (NCLT). The agreement with ICICI Bank for the share transfer represents a strategic milestone in this process.
The proposed divestment of the Cement Business is another crucial aspect of Jaiprakash Associates' comprehensive approach to decrease its outstanding borrowings significantly. The company's management and trusts holding shares have signed off on the Settlement Agreement with ICICI Bank, setting in motion a pivotal phase in their long-term financial strategy. With these moves, Jaiprakash Associates aims not only to alleviate its current debt situation but also to pave the way for future financial stability and growth.
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