Mumbai: Three private credit funds - Kotak Special Situation Fund, an Edelweiss managed fund and Allianz Global Investors - agreed to jointly provide a ₹3,200 crore debt facility to steel maker Jayaswal Neco, said people aware of the development.
The company will use the funds to repay high-cost money raised from Ares SSG-backed Assets Care and Reconstruction Enterprise (ACRE), the people said.
Edelweiss Alternatives Assets through its Edelweiss Special Opportunities Fund, along with other funds, will invest ₹1,000 crore while Kotak Special Situation Fund will provide ₹1,500 crore, and Allianz Global Investors ₹700 crore, one of the persons cited above said. The funds will invest in non-convertible debentures (NCD) maturing in December 2028.
In an email response to ET, Allianz Global said the 'investment and data is factually correct,' while Edelweiss and Kotak fund did not respond to request for comments.
Jayaswal Neco could not be reached for comments.
The company informed stock exchanges Thursday that its committee of directors approved the terms of ₹3,200 crore unlisted, secured NCD that would be allotted to investors on December 15. It did not name the investors.
These NCDs will offer 14.5% per annum coupon (compounded monthly) and 3% additional coupon, said the stock exchange notice.
The new debt will be backed by promoters' - Arvind Jayaswal and Ramesh Jayaswal - personal guarantee and a 100% pledge over their shares in the company.
Jayaswal Neco is raising fresh debt because the terms of the restructuring support agreement with ACRE (its existing lender) require them to refinance the debt by mid-December. The agreement signed in August 2021 said the company must refinance its ₹3,138.8 crore outstanding loans by mid-December 2023, as per stock exchange disclosures made on May 23.
Between 2018 and 2021, ACRE-led investors acquired distressed debt from all lenders offering 70-75 paise on a rupee. Subsequently, the ₹5,700-crore principal debt was restructured, wherein 60% of the debt was deemed sustainable and the rest was converted into equity, as reported by ET on May 28 last year.
ACRE had sold the loans to about 10 investors including Oaktree Capital, Centerbridge Partners, Bank of America, Broad Peak Capital, Davidson Kempner, PAG and Arkkan Capital, as ET reported.
Jayaswal Neco, which fought a four-year legal battle to thwart bankruptcy, was among the second list of 28 companies issued by the RBI in December 2017. RBI wanted lenders to approach bankruptcy court to resolve these companies. Although SBI had filed a petition, Jayaswal Neco never got admitted for insolvency. Last year, the Supreme Court allowed withdrawal of the insolvency petition.