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    Jaypee Infra lenders reject Lakshadweep’s proposal

    Synopsis

    ETon May 3 reported that the committee was set to reject the offer from Lakshadweep, a venture promoted by some relatives of pharma billionaire Dilip Shanghvi.

    jaypee-BCCL
    If the lenders had accepted the Lakshadweep offer, they would have suffered a loss of about Rs. 3,240 crore, said the official.
    NEW DELHI: The committee of lenders (CoC) for Jaypee Infratech rejected the proposal of Lakshadweep, a joint venture between Suraksha Asset Reconstruction and Dosti Realty, to acquire the beleaguered company, said two people familiar with the development.

    Lenders who together account for more than 85% of the real estate firm’s outstanding loans voted against the proposal, they said. IDBI Bank, which at 44% holds the largest share of the company’s arrears of Rs. 9,913 crore to secured lenders, rejected the proposal, while State Bank of India with about 7% exposure abstained from voting and Bank of Maharashtra and Jammu & Kashmir Bank voted in its favour.

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    “The revised offer of Lakshadweep is below the liquidation value therefore the lenders have decided to vote against it,” said a senior official at one of the lenders. Lakshadweep, in fact, had cut its offer to Rs. 7,085 crore from Rs. 7,350 crore, he added.

    ETon May 3 reported that the committee was set to reject the offer from Lakshadweep, a venture promoted by some relatives of pharma billionaire Dilip Shanghvi.


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    Of the total debt of Rs. 9,913 crore in August 2017, Rs. 8,500 crore was the principal and the rest interest. In addition, the company owes Rs. 412 crore to operational creditors. If the lenders had accepted the Lakshadweep offer, they would have suffered a loss of about Rs. 3,240 crore, said the official. In addition, the upfront amount it had proposed to bring was only Rs. 1,070 crore, he added.

    The development comes even as Jaypee Infratech’s promoter, Jaiprakash Associates Ltd (JAL), made a Rs. 10,424 crore offer for the company. If that is accepted, the lenders will not have to take any haircut. Lenders have asked the promoter to make the presentation before the CoC as instructed by the Supreme Court — JAL had approached the top court seeking to regain control of the company.

    JAL is likely to submit the same proposal to the Supreme Court on Friday. Under the plan, the parent company has promised to complete the stuck housing projects of Jaypee Infratech and deliver flats to all buyers in 42 months. All the flat buyers will also be paid penal interest for the delayed period, it has said.

    In addition, it committed to bear half the stamp duty as and when these flats are delivered, said the official. JAL that owns a 60.8% stake in the company has also promised to give 2,000 equity shares in Jaypee Infratech to each home buyer.

    JAL has deposited Rs. 750 crore with the Supreme Court to meet the refund if any home buyer wants the advance paid by him or her back. Initially, a large number of buyers had asked for refund, aggregating to Rs. 1,350 crore. Nearly half of them have now withdrawn their request. The demand from the reaming is worth about Rs. 750 crore and can be met with the money deposited with the Reserve Bank of India, said the official. The flats where the buyers take refund would be transferred to Jaiprakash Associates, he added.

    JAL has sought permission from the lenders and court to allow it to securities the toll receivable from the Yamuna Expressway for 10 years to raise about Rs. 2,700 crore. Part of this would be used to complete the projects and some portion will be used to part pay loans, a senior official of another bank said.

    “Now, the ball in the Supreme Court. The key issues are how to protect the interest of the home buyers and lenders’ exposure. We are keeping our figure crossed,” the banker said.

    Under the proposed plan, Jaiprakash Associates suggested that lenders allow to swap Rs. 4,746 crore of loans against 1,437 acres of land. In addition, Rs. 2,418 crore of loan should be converted into 12-year optionally convertible or non-convertible debentures. It committed an upside in toll collection and land sale realisation aggregating to Rs. 1,218 crore.


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