JBF Industries soars 20% on talk of strategic stake sale

JBF Industries soared almost 20% to Rs 237 on the BSE in early morning trade after the media report suggested that the company is in discussions with potential buyers for a stake sale.

The BSE said the Exchange has sought clarification from JBF Industries on October 18, 2017 with reference to news in www.livemint.com dated October 18, 2017 quoting "JBF Industries is said to be in talks with Indorama group, Reliance Industries and The Chatterjee Group for a strategic stake sale." The reply is awaited.

According to report, the Mumbai-based polyester maker is in discussions with potential buyers for a stake sale which could lead to a change of management control in the company.

The stock has recovered nearly 74% from its 52-week low of Rs 136 touched on August 10, 2017 in intra-day trade. The market price of the company tanked 53% from Rs 310 on June 22 to Rs 145 on August 9 after the rating agencies downgraded the rating of the company on delays in servicing its debt obligations by JBF group.

“The rating of the company has been downgraded to “D” default rating by rating agencies predominantly due to delays by JBF group in servicing its debt obligations,” JBF Industries on July 28, 2017, said in a regulatory filing.

The company said, due to the recent policy changes by the Government of India namely, Demonetisation exercise and Goods & Service Tax (GST) implementation, there have been protesting shut downs in the domestic unorganized textile segment.

This has resulted in the cash flows of the company to be severely affected and delays in servicing some of its debt obligations with the lenders. In turn this has led to a formation of a Joint Lending Forum (JLF) by the lenders as per applicable guidelines of the Reserve Bank of India (RBI), it added.

At 11:49 AM; the stock was up 13% at Rs 224 on the BSE, as compared to 0.4% decline in the S&P BSE Sensex. The trading volumes on the counter jumped more than seven-fold with a combined 2.23 million shares changed hands on the BSE and NSE so far.

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