MC: Jaypee Infratech lenders discuss bids by NBCC and Suraksha Asset Reconstruction Company

18 February 2019: Lenders of Jaypee Infratech met on February 18 to discuss the resolution plans submitted by two shortlisted bidders – state-owned NBCC and construction company Suraksha Asset Reconstruction Company – to take over the realty firm and complete stalled projects, some of which have been delayed by over a decade.

The Committee of Creditors (CoC) has recommended that a forensic audit of the company’s accounts be conducted as per the demand of homebuyers, sources told Moneycontrol.

“Both bids were presented to COC and negotiations are likely to commence soon. One of them will eventually be shortlisted and would be put to vote by March-end. The COC also agreed to put to vote homebuyers’ request for a forensic audit. It would be put to vote next week between Wednesday (February 27) and Saturday (March 2),” the source said.

At the meeting, interim resolution professional Anuj Jain provided a status update on the resolution process.

A request from authorised representatives of the homebuyers for conducting a fresh forensic audit was also heard. Homebuyers were represented by Kuldip Verma.

Presentations were made by the two bidders before Jaypee’s financial creditors that includes homebuyers. According to a source, NBCC is ahead in the race to acquire Jaypee Infratech under the insolvency resolution plan. The government’s construction arm had reportedly filed a higher financial bid compared to what Suraksha Asset Reconstruction Company has bid, which were opened on February 16.

According to sources, NBCC has offered Rs 1,000 crore upfront to lenders and Rs 2,150 crore to homebuyers. It has offered Rs 3,000 crore in land deals to lenders, and said that the projects would be completed in four years.

In a filing to the BSE on February 15, NBCC said last week that it has submitted the bid to Interim Resolution Professional Anuj Jain. “Resolution Plan in respect of Jaypee Infratech has been submitted by the NBCC to the Interim Resolution Professional on 15th February, 2019,” the filing said.

Apart from the housing project, Jaypee Infratech owns Taj Expressway and Japyee Hospital. The expressway generates revenues in toll charges.

Interestingly, Suraksha ARC is believed to have offered Rs 10 crore upfront to banks, with Rs 3,000 crore earmarked for homebuyers. It has proposed to repay loans worth Rs 5,000 crore through a debt-asset swap. It plans to complete construction of flats in three years, with over half the remaining apartments (around 20,000) to be handed over the next two years.

In May 2018, Suraksha’s Rs 7,350-crore bid for Jaypee was rejected for being below liquidation value.

The final resolution could take close to a month as lenders will rate the two bidders’ plans on several parameters, including cash flow of the companies, real estate competency, net worth and project turnaround capability.

In the CoC meeting held on January 17, financial creditors and homebuyers of Jaypee Infratech had extended the deadline for shortlisted bidders to submit proposals to revive the realty firm to February 15.

The committee also approved the extension of Corporate Insolvency Resolution Process (CIRP) for 90 days with a voting percentage of over 71 percent. In January, it had approved the evaluation criteria to be adopted to select a bidder for taking over the realty firm.

The National Company Law Tribunal (NCLT) had on August 10, 2017, admitted IDBI Bank’s plea to initiate insolvency proceedings against the JIL for defaulting on Rs 526-crore loan. While admitting the plea of IDBI Bank, the NCLT had appointed Anuj Jain as IRP to manage the company’s business.

Moneycontrol reported

ET: ArcelorMittal offers Rs 4,800 crore for Essar Mahan under OTS: Power Finance Corporation

18 February 2019: Steel giant ArcelorMittal has proposed a resolution offer of Rs 4,800 crore to lender of stressed Essar Mahan power project, over 37 percent higher than offered by the promoter Essar Group. 

Essar Group has made a resolution offer of Rs 3,500 crore under one time settlement (OTS) scheme for Essar Mahan, which is a 2×600 MW coal based power plant situated in Madhya Pradesh. 

“We had earlier received a resolution offer of Rs 3,500 crore from the developer (Essar Group) himself for Essar Mahan under OTS scheme. But, now we have received an offer from ArcelorMittal for about Rs 4,800 crore,” Power Finance Corporation‘s (PFC) chairman and managing director, Rajeev Sharma, told reporters here. 

Besides PFC, other lenders to Essar Mahan are ICICI Bank, which is the lead bank, Punjab National Bank (PNB), Rural Electrification Corporation (REC). The total debt of the power plant is of Rs 7,500 crore. 

The offer made by ArcelorMittal is at Rs 4 crore per MW, Sharma said adding that the prevailing rate for setting up a new power plant is Rs 6 crore per MW. 

He said the lenders led by ICICI Bank will soon meet to take a call on the ArcelorMittal’s offer. 

“We are considering the ArcelorMittal proposal because there is a difference of almost Rs 1,300 crore. It is a good offer at Rs 4 crore per MW,” Sharma said. 

In October last year, Essar Group commissioned both units of the power plant. However, the project does not have power purchase agreement (PPA) and fuel supply agreement (FSA), Sharma said. 

It could be noted that last year in October, a committee of Essar Steel creditors had picked ArcelorMittal to acquire the debt-laden company for over Rs 42,000 crore. 

ArcelorMittal’s resolution plan for Essar Steel, included an upfront payment of over Rs 42,000 crore to settle debt and a further Rs 8,000 crore of capital injection into the company to support operational improvement, increase production levels and deliver enhanced levels of profitability.

The Economic Times reported