India’s GAIL to take over debt-saddled JBF Petrochemicals

MUMBAI (ICIS)–State-owned Gas Authority of India Ltd (GAIL) has emerged as the successful bidder to acquire debt-ridden JBF Petrochemicals.

GAIL’s resolution plan for JBF Petrochemicals has been approved by the bankrupt company’s creditors as per the requirements of the Insolvency and Bankruptcy Code (IBC), GAIL said in a disclosure to the Bombay Stock Exchange (BSE) on 18 October.

The resolution plan has received “affirmative vote of 100% of the members of the committee of creditors”, it added, without disclosing its offer for JBF Petrochemicals.

According to media reports, the offer was slightly more than Rs20bn for the debt-saddled JBF Petrochemicals.

GAIL now needs approvals from the bankruptcy tribunal, the National Company Law Tribunal (NCLT), to complete the take-over process.

JBF Petrochemicals, a subsidiary of polyester producer JBF Industries, was set up September 2008 to operate a planned 1.25m tonnes/year purified terephthalic acid (PTA) plant at Mangaluru in the southern Karnataka state.

The plant, which is a backward integration project for JBF Industries’ polyester plants, was commissioned in 2017 but stopped operations after the company defaulted on its loans in the same year.

On 1 February 2022, JBF Petrochemicals’ creditors decided to initiate insolvency proceedings for the company, which has more than Indian rupee (Rs) 50bn ($601m) in debt.

The creditors of JBF Petrochemicals had received expressions of interest from seven companies, including Reliance Industries Ltd (RIL); Materials, Chemicals & Performance International (MCPI); HPCL-Mittal Energy Ltd (HMEL); Jindal Polyfilms; GAIL and a consortium of Oil and Natural Gas Corp (ONGC) and Indian Oil Corp (IOC).

They had earlier extended the bid-submission deadline, to accommodate state-run oil and gas firms, which require approvals from the government before making their final bids for JBF Petrochemicals.

($1 = Rs 83.13)