Jain Irrigation Systems successfully implements Debt Resolution; Stock surges ~5%

30 Mar 2022 , 01:52 PM

Jain Irrigation Systems Limited has successfully implemented the Debt Resolution effective on March 25, 2022. It was approved and announced in the Joint Lenders Meeting on March 29, 2022 after fulfilling all Conditions Precedent as per the Master Restructuring Agreement (MRA) signed on 10th February 2022.

On completion of this debt restructuring, normalcy has been restored to the accounts under the loan facilities granted by all lenders of the Company, and all past irregularities and defaults stand cured.

The Debt Resolution was invoked on June 30, 2019 after a series of consultations with lenders. It was triggered due to certain delays in debt servicing, induced by extended working capital cycles faced by the Company due to delay in receipts from governments.

Key highlights

• RP has been implemented as per the Notification of Prudential Framework for Resolution of Stressed Assets issued by Reserve Bank of India on June 7, 2019.
• Debt Restructuring has been completed with unanimous approval of all secured lenders.
• The total amount of the debt restructured is Rs3,878 crore.
• About 40% of the total debt has been converted into long term NonConvertible Debentures at an interest rate of 0.01%.
• Proposed infusion of equity by promoters along with investors ~ Rs267 crore ~ 40% already infused; balance infusion expected over the period of 18 months.
• Approximately 7.89 crores ordinary equity shares issued to the lenders.
• During this period the Company has also restructured overseas bonds of 200 million USD.

Company will share more details once books of accounts are audited as per the relevant accounting standards at the end of current fiscal year.

Impact on the Company & its performance going forward:

• Access to additional working capital facilities of approximately 300 crores.
• Significantly reduced Interest cost
• Deferred payments to the lenders, improved fund flow for business.
• Overall improvement in the operations and performance of the company.

Anil Jain, MD & CEO said I am very pleased to say that “Consortium of lenders led by State Bank of India and the Company have worked together to protect the interest of all the stakeholders.

The journey of this RP from its inception till implementation has been arduous. However, the belief and trust of all the stakeholders and more particularly of the lenders in the management; and the untiring efforts at everyone’s end involved in the process has helped the company and its management to sail through this phase and achieve successful implementation of the Resolution Plan.

At around 1:56 PM, Jain Irrigation Systems was trading at Rs42.20 apiece up by Rs1.9 or 4.71% on Sensex.