DUBAI/BANGALORE (Reuters) - JBF RAK, a United Arab Emirates subsidiary of Indian polyester maker JBF Industries, expects to resume production of PET resin as soon as next month after financial problems in the group disrupted operations, a senior company official said.
“Restructuring talks with banks are ongoing and the outcome will be for the benefit of all stakeholders,” JBF RAK’s Chief Operating Officer Rohit Maindwal told Reuters by telephone on Thursday.
The firm is in talks with banks about renegotiating around 2 billion dirhams ($544.6 million) of debt, banking sources told Reuters earlier this week. Maindwal declined to confirm the amount or comment on progress in the talks with banks.
JBF RAK, which exports around the world, has a 45 percent share of the market for PET chips in the six-nation Gulf Cooperation Council, according to the website of JBF Industries, which is among the top five global producers of PET chips.
PET, or polyethylene terephthalate, is used as a raw material for making packaging materials such as bottles and containers for packaging a wide range of food products and other consumer goods.
JBF RAK stopped PET production at its plant in the emirate of Ras Al Khaimah at the end of June after the company experienced a shortage of working capital, Maindwal said.
“PET was put under a temporary stoppage at the end of June as we are expecting our raw material supplies from our Indian client to start some time in September, and then we will restart,” he said.
Before the stoppage, JBF RAK produced about 350,000 tonnes of PET annually. The company has continued to make polyester film, Maindwal added.
In a statement earlier on Thursday, parent JBF Industries said it was working with its lenders to resolve cashflow issues and that all its plants were running “satisfactorily”.
Its shares closed 5.9 percent higher on the National Stock Exchange of India after hitting a three-year low earlier in the day. They have dived more than 20 percent this week because of concern about the company’s debt.
JBF’s board is due to meet on Friday to discuss the company’s earnings and the sale or restructuring of overseas units to cut debt. India Ratings and Research, which cut the company’s rating to ‘D’, said last month that the downgrade was due to “significant deterioration in the group’s financial risk profile, resulting from losses in overseas operations”.
In its statement on Thursday, JBF said some of its payments to Indian lenders had been delayed, complaining that recent policy changes by the Indian government had hurt its cashflow.
Bankers in the UAE told Reuters that JBF RAK had requested fresh working capital to help it restart PET resin production. In addition to the 2 billion dirhams of debt being renegotiated, the firm owes an additional 1 billion dirhams to international lenders, they said.
Maindwal said JBF RAK’s chief executive Cheerag B. Arya, a prominent Indian businessman known for his collection of Ferrari cars, was out of the country. Banking sources said B.C. Arya, chairman of the parent firm, was cooperating with banks in discussing the debt. The two could not be reached for comment.
Banks with exposure to JBF RAK include Mashreq, Abu Dhabi Commercial Bank, United Arab Bank, Ajman Bank and National Bank of Fujairah, according to the bankers and Thomson Reuters data. Private equity firm KKR took a 20 percent stake in JBF Industries by investing $150 million in 2015.
Additional reporting by Devidutta Tripathy in Mumbai; Editing by Andrew Torchia and Adrian Croft