By Devidutta Tripathy and Tommy Wilkes
MUMBAI (Reuters) - Indian banks plan to take control of indebted infrastructure company Jaiprakash Associates Ltd by swapping part of its loans for equity, two banking sources with direct knowledge of the matter said on Friday.
Under the plan, put together under an Indian central bank scheme to help lenders recover debts, the founders of real-estate-to-road building conglomerate Jaypee Group could eventually lose control of their flagship company.
One of the sources said Jaiprakash Associates, best-known as the builder of India's Formula One racing track, was delaying loan servicing payments, leaving lenders no choice but to launch a debt-for-equity exchange.
Creditor banks will soon decide on the details of the debt-for-equity swap plan, said the source at a lender. The senior banker, who declined to be named, said Jaiprakash Associates owed about 310 billion rupees ($4.6 bln).
A spokeswoman for Jaypee Group did not immediately respond to a request for comment.
Jaiprakash Associates is one of India's most-leveraged companies after a period of debt-fuelled growth.
Like many Indian infrastructure firms, it is now facing mounting pressure from its lenders to pay back debts. An economic downturn in India in 2013 and 2014 squeezed revenues and the company has struggled to sell assets to raise cash.
Earlier on Friday, an unnamed spokeswoman for Jaiprakash Associates was quoted by local daily Economic Times as saying that ICICI Bank, one of the company's main lenders, had marked a reference date of June 28 for the debt-for-equity swap, or strategic debt restructuring, as the central bank scheme is called.
In response to a query from Reuters, an ICICI Bank spokesman said the bank would not comment on client-specific information.
Jaiprakash Associates is meanwhile trying to sell its cement assets to UltraTech in a $2.37 billion deal.
News reports said this week that the deal had hit a hurdle and could be tweaked. UltraTech said in a statement on Friday that the agreement to buy Jaiprakash's cement assets was valid and under implementation.
Indian banks have so far invoked the debt-for-equity swap scheme at 19 companies that owed lenders a combined 900 billion rupees, according to brokerage Religare. They have struggled, however, to find new owners for the companies.
($1 = 67.3082 Indian rupees)
(Editing by Susan Fenton)
