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JBF Industries to undergo restructuring

JBF Group has entered into an arrangement with KKR, an existing financial investor, for restructuring of the equity holding and management structure of JBF Global Pte Limited (Singapore), a subsidiary of JBF Industries Limited. Until now, JBF Global Pte Limited held 100 percent of JBF Petrochemicals Limited and JBF RAK LLC. Under a new arrangement, encapsulated in a signed, binding Term Sheet, following are the highlights:
  • KKR will hold 51% economic interest, whereas JBF Industries will have 49% economic interest, in the PTA business.
  • KKR will arrange for last mile funding to complete the PTA plant, expected to be completed in 4-5 months’ time.
  • This arrangement will effectively reduce around USD500mn of debt, on a consolidated basis, in JBF Industries, while retaining 49% economic interest in the PTA business.
The PTA business is expected to produce a sizeable EBITDA in the first full year of operations. The above is subject to approval of the lenders to JBF Petrochemicals.

JBF Industries has entered into discussions with its consortium of lenders for a restructuring of its debt of around Rs2,600cr. The restructuring process is expected to be completed by August 2018.

The above measures are aimed at aggressively deleveraging the balance sheet whcih is a positive development for the company. We recommend investors to hold the stock.

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