ET: Jaypee infra lenders seek clarity from NBCC on acquisition bid

2 March 2019: Lenders of crisis-hit realty developer Jaypee Infratech, in a meeting held on Friday, sought clarity from state-run NBCC on certain legalities and on its bid to acquire the company. NBCC is expected to respond to these queries and observations in a week’s time, said two persons with direct knowledge of the development. 

“Committee of Creditors (CoC) made certain observations and sought clarifications from NBCC on certain legalities and the bid. The committee was keen to understand NBCC’s model for the proposal and was also asked if it can complete the projects in less than five years,” said one of the persons mentioned above. The meeting lasted for almost 90 minutes. 

State-run NBCC and Suraksha Asset Reconstruction Company have bid and are in race to acquire Jaypee Infratech under the Insolvency Resolution Process. 

However, it could not be ascertained if the other bidder Suraksha Asset Reconstruction Company too was called for the meeting today. NBCC declined to comment for the story. 

Jaiprakash Associates, promoter of the stressed realty developer, has also submitted a proposal to lenders of its subsidiary to settle their dues. Both the bidders have already made presentations to the Committee of Creditors (CoC) two weeks ago. Lenders are likely to hold more meetings with the bidders before taking a final call. 

The company has an outstanding debt of about Rs 9,800 crore. Its lenders include IDBI, IIFCL, Axis Bank, Bank Of Maharashtra, Corporation Bank, ICICI Bank, IFCI, J&K Bank, LIC, SBI, Syndicate Bank, Srei Equipment Finance, and Union Bank. 

About 32,000 home buyers were left in the lurch after the Allahabad bench of the NCLT on August 9 classified Jaypee Infratech as insolvent on the petition filed by IDBI Bank under Section 7 of IBC, 2016. Jaypee had defaulted on a Rs 526-crore loan by the bank. 

In 2017, the NCLT admitted the application of an IDBI Bank-led consortium seeking resolution of Jaypee Infratech’s debt under the Insolvency and Bankruptcy Code. Lakshadweep, which is part of the Suraksha Group, subsequently emerged as the frontrunner to acquire the firm. However, in May last year, lenders rejected its Rs 7,350-crore bid, as they found it to be inadequate. On the National Company Law Tribunal‘s direction, Jain started a fresh initiative in October 2018 to revive the company that has several stuck housing projects in Noida and Greater Noida. 

A subsidiary of Jaypee Group flagship firm Jaiprakash Associates, Jaypee Infratech is developing about 32,000 flats, of which it has delivered 9,500 units.

The Economic Times reported

DNA: Airtel to raise Rs 32,000 crore in fight against RJio

1 March 2019: Facing unabated competition from Reliance Jio, telecom firm Airtel plans to raise up to Rs 32,000 crore, including through a rights issue.

The Board of Directors of the company on Thursday approved the fund raising of up to Rs 32,000 crore through rights issuance of up to Rs 25,000 crore and perpetual bond with equity credit up to Rs 7,000 crore.

The terms of the rights issue cleared by the Board include price of Rs 220 per fully paid equity share (a premium of Rs 215 per fully paid equity share over the face value of Rs 5 per share); and a rights entitlement ratio of 19 shares for every 67 shares held by eligible shareholders, the statement said.

The perpetual bond of up to $1 billion (about Rs 7,000 crore) denominated in foreign currency is subject to price, market conditions and other terms and conditions as acceptable, and with conditions allowing for full accounting equity credit and subject to all applicable laws, Airtel said in a communication to the stock exchanges. The timings of the issue and other technicalities will be decided by the special committee of directors set up for the fundraising.

With tariffs at the lowest level, incumbents such as Airtel and Vodafone Idea have been struggling to sustain themselves with profits and margins on a constant decline.

The telecom sector has been reeling under financial constraints since the entry of Reliance Jio. The shock waves are still being felt even after over two years of Jio’s entry. In the third quarter of this fiscal, Vodafone Idea posted a loss of about Rs 5,005 crore, while Airtel posted a 72% decline in profits and Reliance Communications knocked the doors of NCLT for insolvency, the second telecom firm to do so in recent times. However, Reliance Jio has managed to turn profitable in just two years of its operations.

Vodafone Idea has also announced plans to raise Rs 25,000 crore through a rights issue.

The cumulative debt of the industry remains high at Rs 7 lakh crore. Continuous investment in their networks has become difficult for Airtel as well Vodafone Idea, which is still in the process of integrating the two networks.

The fundraising will help Airtel to invest at a faster pace in 4G expansion.

The ‘Special Committee of Directors for Fund Raising’ has been authorised by the Board to proceed with rights issue and determine its terms and conditions including setting the record date, finalisation of the Letter of Offer and other details, and also authorised the ‘Committee of Directors’ to decide, assess and conclude on the issuance of the perpetual bond.

A BIG CALL

  1. The company plans a rights issuance of up to Rs 25,000 crore and perpetual bond with equity credit up to Rs 7,000 crore  
  1. The rights issue includes price of Rs 220 per fully paid equity share (a premium of Rs 215 per fully paid equity share over the face value of Rs 5 per share)

DNA reported