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Bank of America takes over Jayaswal Neco loans

Steel News - Published on Mon, 25 Mar 2019

Image Source: USA Today
ToI reported that Bank of America has taken over loans worth around INR 3,290 crore owed by Jayaswal Neco Industries Limited to a consortium of financial institutions led by SBI. BoA has brought the JNIL deal through an asset reconstruction company Assets Care and Reconstruction Enterprise. Sources privy to the deal said loans worth INR 4,700 crore which form nearly 88% of JNIL’s total debt were auctioned through the National Company Law Tribunal. BoA was the single bidder which took over the loans at 70% of the value. Or in other words banks have taken a haircut of 30% in the loans granted to JNIL.

The bank has been particularly looking for certain potentially good projects where the loans have been defaulted for whatever reasons, said independent sources. In this case 88% of the loans were auctioned. Now in turn BoA will be looking for potential investors who would be taking over the debt and later convert it into equity. This will also pave way in bringing a professional management in the company through the new stakeholders.

JNIL’s loan was classified as NPA following an inspection by the RBI into the lenders’ accounts during 2016. It was pointed out by RBI that the loan should be termed as NPA because the company could not meet the commercial operation date for its plant at Raipur, for which the loan was availed. Even as the bankers had contended that the loans were being still serviced, RBI inspectors had maintained that not meeting the COD itself raised doubts over JNIL having sources to repay the loan.

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Posted By : Rabi Wangkhem on Mon, 25 Mar 2019
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