1 April 2019: Banks have decided to drag the debt-laden JBF Petrochemicals to the bankruptcy court after a deal by private equity fund KohlbergKravis Roberts & Co (KKR) to take majority stake in the company stalled, three people familiar with the plan said.
KKR was supposed to infuse more funds and take a controlling stake in JBF’s Mangalore-based subsidiary JBF Petrochemicals under a deal reported in July last year. However that was dependent on JBF promoters restructuring their Singapore-based subsidiary JBF Global Pte and paying back Rs 450 crore of intra corporate deposits. Both these conditions have note been met, stalling the KKR infusion.
“We have been waiting for the KKR funds to come. Looks like that is not going to happen, so recovery process has been initiated. We have filed a case in NCLT but it is yet to be admitted,” said one of the persons cited above.
Founded as a yarn texturing firm in 1982, JBF makes polyester value chain products used in consumer goods, textile and packaging industries.
In August, JBF Industries said KKR will buy 100% of JBF Petrochemicals Ltd. In 2015, the New York-headquartered PE firm invested $150 million for a 20% equity in JBF Industries and to buy zero-coupon compulsorily convertible preference shares.
This infusion was a lifeline to the company, which has a total consolidated debt of Rs11,000 crore, including $400 million (around Rs 2,500 crore) of ECBs from public sector banks led by IDBI Bank, Indian Overseas Bank, Bank of Baroda and Union Bank of India and also Exim Bank.
There are 14 other lenders the company is indebted to and its exposure to Indian banks exceed Rs 6,000 crore.
KKR still retains the option to take control of the petrochemical entity, said one of three persons cited above.
“KKR has kept its options open. The offer to put more money still stands but certain criteria needs to be met first,” said this person.
KKR declined to comment.