Jaiprakash Power Ventures is likely to default on payments for convertible bonds worth $200 million due on February 13 as it could not generate enough revenue from its operations. In a statement to the stock exchanges, the company said, “The revenue generated from its power projects and existing cash balances may not be sufficient to fulfil the obligations under the convertible bonds on February 13, 2015.” The company, however, said it was confident of its ability to pay its dues under the bonds by March 31, 2016. The default, if it happens, will be the first major convertible bonds default by an Indian company since Suzlon Energy failed to meet its repayment obligations in 2012. Jaiprakash Power raised $200 million through foreign currency convertible bonds in 2010. The conversion price of the paper, due next month, was fixed at Rs 85.81 a share. However, Jaiprakash shares closed 1.60 per cent lower at Rs 11.67 rupees on the BSE Wednesday, making conversion impossible for the bondholders and leaving the company needing fresh funds to repay loans. The company has called a meeting with the convertible bondholders in Hong Kong on February 2 to discuss a repayment schedule. The firm has total debts worth $2.7 billion. Jaiprakash, which has been selling hydroelectric plants to raise cash, said its power business had been “severely impacted” by various reasons beyond its control, including the Supreme Court decision in September to cancel coal blocks that had been allocated to the company. “However, notwithstanding the difficulties faced in the last few years, the company has been able to substantially complete the power projects it had undertaken,” it said. “The company is of the view that while the conditions surrounding the recovery of Indian infrastructure and power sector have improved, recovery is still a work-in-progress. The new government has taken a host of steps to improve the circumstances . However, given the conditions of the last few years, it may still take at least a year or two before these steps show results,” the company said.
