Ares SSG-led Group signs debt recast deal with Jayaswal Neco

Mumbai: The Ares SSG Capital-led consortium signed a debt restructuring deal with Jayaswal Neco after the Supreme Court allowed withdrawal of the insolvency petition against the distressed steelmaker, people aware of the development told ET.

The deal involves restructuring ₹5,700 crore loans while Assets Care and Reconstruction Enterprises (ACRE) - an asset reconstruction company - acquired a 31% equity stake. Promoter Ramesh Jayaswal and his family's stake was lowered to 48% from 69% held earlier. ACRE is majority-owned by Ares SSG Capital. The remaining 21% is held by the public.

Close to ten investors, including Oaktree Capital, Centerbridge Partners, Bank of America, Broad Peak Capital, Davidson Kempner, PAG and Arkkan Capital, are new lenders to the steel company. Alvarez & Marsal advised the consortium on the restructuring of the debt.


Over the last three years, Ares SSG Capital led-investors acquired Jayaswal Neco's entire loan book from domestic lenders such as State Bank of India, ICICI Bank and Union Bank of India, offering 70-75 paise on their one rupee loan.

"This (Jayaswal Neco case) was a complex restructuring that involved multiple diverse stakeholders, including ten global and regional investors (funds), four residual lenders (banks), company management, shareholders and their advisors. Given this complexity and the pandemic, negotiations were protracted," said Nikhil Shah, managing director of Alvarez & Marsal.

Jayaswal Neco could not be reached for comments.

As per the debt recast, 60% of the debt was deemed a sustainable loan. Of the remaining loan, a part of it - nearly ₹880 crore - was converted into equity and a piece into a term loan said a person aware of the transaction. The promoter has pledged entire equity with lenders, the same person said.

Jayaswal Neco, which fought a four-year legal battle to thwart bankruptcy, was among the second list of 28 companies issued by the Reserve Bank of India in December 2017. RBI wanted lenders to approach bankruptcy court for the resolution of these companies. Although SBI had filed a petition, the company never got admitted due to a series of litigations.

Each bank separately sold its loans to ACRE led investors in the last three years. Consequently, the ARC received approval from the apex court to withdraw the application for insolvency proceedings.