UAE manufacturing firm JBF RAK seeks to renegotiate Dhs2bn of debt

Manufacturer JBF RAK is in talks with banks about renegotiating around Dhs2bn ($544.6m) of debt, banking sources told Reuters.

The polyester producer, which according to its website is an affiliate of India’s JBF Group, has contacted lenders about reviewing its debt obligations, said the sources, who spoke on condition of anonymity as the matter is not public.

One of the sources said JBF RAK, which has relationships with 19 banks, is seeking to extend maturities on outstanding bank liabilities of around Dhs1.96bn.

The company may also seek a restructuring, but no decision has been taken yet, according to a second banking source.

The latest financial statements on the group’s website show JBF RAK recorded an annual loss of Dhs110.03m ($29.96m) for the year ended Mar. 31 2016, compared to a profit of Dhs1.44m a year earlier.

JBF RAK is one of five plants owned by JBF Group. The others are located in India, Belgium and Bahrain. The group, which is listed on India’s National Stock Exchange, said on August 3 its board was planning to discuss the sale or restructure of the overseas subsidiaries of the company, without elaborating.

JBF Group was downgraded to a ‘D’ default rating by credit rating agencies due to delays in servicing its debt, a company filing shows. It did not name the agencies.

India Ratings and Research, which has downgraded the company to D, said on July 27 the downgrade was on “account of a significant deterioration in the group’s financial risk profile, resulting from losses in overseas operations”.

Recent policy changes by the Indian government, which include a new goods and services tax and 2016’s demonetisation push, has stirred protest and shutdowns in the “domestic unorganised textile segment”, the group said in a disclosure in response to the downgrades.

“This has resulted in the cash flows of the company to be severely affected and delays in servicing some of its debt obligation with the lenders,” the group said.

Update:

Ras al-Khaimah Investment Authority (RAKIA), a state body in the emirate of Ras al-Khaimah, said on Monday it did not own a stake in JBF RAK.

JBF RAK’s website says the company was established as a joint venture by India’s JBF Group and RAKIA in 2007. United Arab Emirates central bank records, seen by Reuters, show RAKIA owned 60 percent of JBF RAK.

However, RAKIA said in a statement to Reuters on Monday that it “has no share ownership” in JBF RAK.

“The company is 49 percent owned by JBF Global Pte. Ltd, a Singapore-based private company, with 51 per cent ownership by a local UAE company,” RAKIA said without elaborating.

JBF RAK, which makes a synthetic fibre and resin which is spun into fabrics but also moulded into disposable bottles for beverages, shampoo and liquid soap, did not respond to a request for comment.