On Wednesday, Jaiprakash Power Ventures Ltd's shares jumped over 11% following the approval of Adani Enterprises' resolution plan for the insolvent infrastructure group by Jaiprakash Associates Ltd's (JAL) creditors. JP Power, which was trading at Rs 22.37, saw an increase of more than 10% in early trading as investors responded to the newfound clarity regarding the future of JP Group's distressed assets. JAL, the previous promoter entity, owns nearly 24% of JP Power.
The increase came after Adani Enterprises revealed that lenders approved its plan to purchase JAL, which has debts of approximately Rs 57,000 crore.According to sources familiar with the situation, the acquisition offer is estimated to be approximately Rs 14,535 crore, which includes an initial payment of Rs 6,005 crore, with the remaining amount to be settled over a period of 1.5 to 2 years.
The Adani proposal was chosen over Vedanta's Rs 16,700-crore bid because lenders favored quicker and more substantial immediate recoveries. Vedanta's offer allegedly included a five-year payment schedule, which creditors were not willing to agree to. The process is being managed by the National Asset Reconstruction Company Ltd (NARCL), which previously purchased JAL's loans from a group of lenders led by the State Bank of India.
Adani's proposal surpassed other competitors such as Dalmia Bharat, Jindal Power, and PNC Infratech. A last-minute bid from JAL's main shareholder, Manoj Gaur, was later retracted. After receiving the committee of creditors' approval, the final resolution plan will be submitted to the National Company Law Tribunal (NCLT) for its approval. If the tribunal endorses it, this would represent one of the most significant insolvency resolutions in India's bankruptcy framework.
JP Power shares have experienced fluctuations in recent trading sessions but are still significantly higher than their 52-week low of Rs 12.35. The stock has also risen due to anticipation that a financially robust promoter's involvement could enhance the long-term stability of the group companies.
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