BT: Jaypee Infratech lenders ask NBCC, Suraksha Group to sweeten takeover bids

14 March 2019: Lenders of debt-ridden Jaypee Infratech on Thursday asked state-owned NBCC Ltd and Suraksha Group to sweeten their offers for acquiring the bankruptcy-bound realty firm, sources said.

NBCC, which has the backing of the government to takeover Jaypee Infratech, is unlikely to increase the offer of Rs 500 crore capital infusion but is ready to help lenders in monetisation of the Yamuna Expressway and the land offered by the PSU in its resolution plan, they said.

In a meeting with lenders, the state-owned firm even proposed that it was ready to work as project management consultant and charge fees for completing the stalled projects, while lenders could keep control of Jaypee Infratech, the sources said.

A meeting of the Committee of Creditors (CoC) was held to discuss resolution plans submitted by NBCC and Suraksha Group. The CoC will soon formally write to both the bidders to submit revised bids based on the discussions held.

In the meeting, NBCC submitted that the company would complete and deliver stalled projects to homebuyers in three years instead of the earlier promise of four to five years, sources said.

In its resolution plan submitted last month, NBCC offered 1,400 acre land worth Rs 6,000 crore as well as Yamuna Expressway to lenders.

It proposed that banks should raise about Rs 2,000 crore against the expressway and provide half of the amount (Rs 1,000 crore) to the state-owned company, which would utilise the fund as an upfront payment.

NBCC has offered to fund the gap of about Rs 1,500 crore between estimated construction cost and receivables from customers.

In contrast, Suraksha Group made an offer of about Rs 20 crore as an upfront payment and land worth Rs 5,000 crore, sources said. The Mumbai-based group promised to complete the pending projects in three years.

The National Company Law Tribunal (NCLT) in 2017 admitted the application of a consortium led by IDBI Bank seeking resolution of Jaypee Infratech under the insolvency law.

Anuj Jain as the Insolvency Resolution Professional (IRP) to manage the company’s business and invite bids from investors.

In the first attempt under the insolvency process, lenders had rejected the Rs 7,350 crore bid of Lakshdeep, part of Suraksha Group, as they found it to be substantially lower than the company’s net worth and assets.

Therefore, the IRP in October 2018 started a fresh initiative to revive Jaypee Infratech on the NCLT’s direction.

Sources had earlier said the settlement proposal of promoter Jaypee group would not be taken up in the CoC meet but lenders could deliberate on it separately.

For the second time in less than a year, Jaiprakash Associates Ltd (JAL) has sought to retain control of its cash-strapped subsidiary. The latest offer is almost similar to what JAL offered last year to the lenders and homebuyers.

In April last year, JAL made an unsolicited offer of about Rs 10,000 crore to settle the dues of Jaypee Infratech. It had offered 2,000 equity shares each to the buyers.

The realty firm has an outstanding debt of nearly Rs 9,800 crore, of which Rs 4,334 crore pertains to IDBI Bank. Other lenders are IIFCL, LIC, SBI, Corporation Bank, Syndicate Bank, Bank Of Maharashtra, ICICI Bank, Union Bank, IFCI, J&K Bank, Axis Bank and Srei Equipment Finance.

Jaypee Infratech is developing about 32,000 flats, of which it has delivered 9,500 units. JAL had deposited Rs 750 crore in the registry of the Supreme Court for refund to buyers. However, this amount was transferred to the NCLT as per an order of the apex court.

Business Today reported

 

 

 

BS: NCLAT adjourns Essar Steel case till March 15

14 March 2019: The National Company Law Apellate Tribunal (NCLAT) has adjourned hearing on the Essar Steel case till March 15, asking the promoters to clear all the group’s dues as per the Supreme Court’s order and then come back to it.

The development comes after Essar Steel MD Prashant Ruia and Essar Group executives, as well as the Standard Chartered Bank, filed a fresh petition before the NCLAT on Monday, seeking to set aside the ArcelorMittal’s winning bid approved by the National Company Law Tribunal’s Ahmedabad bench.

Essar Steel’s debt stands at Rs 49,000 crore while that of its former parent, Essar Group, adds up to over Rs 80,000 crore.

The tribunal on Thursday told the the petitioners to clear the whole of Essar Group’s dues first and then come with a resolution plan for Essar Steel. Essar promoters’ counsel sought a week’s time for this.

The bench also asked ArcelorMittal to raise its bid for Essar Steel as the promoters of the insolvent company have proposed a resolution plan with a higher bid.

The ArcelorMittal’s resolution plan which was approved by the Ahmedabad-bench of NCLT had a bid of Rs 42,000 crore, compared to Ruias’ bid of Rs 54,389 crore.

The plan, approved by the NCLT, sought various exemptions such as stamp duty, fees, transfer charges, and so on. The NCLT held that it is not in a position to grant these exemptions and that the resolution applicant will have to make appropriate submissions to the respective departments of the government.

The NCLT provided a time frame of one year to ArcelorMittal to obtain various approvals and exemptions.

In a related development, official sources have told IANS that the Corporate Affairs Ministry is ready to order a change in the management of the insolvent steel maker.

Sources said the MCA is waiting for the written order from the NCLT after which it would approve and order a management change in Essar Steel.

The Business Standard reported

 

B&B: NCLT gives 1 year time to ArcelorMittal for seeking approvals [Read Order]

14 March 2019: The NCLT while approving ArcelorMittal’s resolution plan has made some observations on the treatment of creditors and statutory concessions.

Bulk of 160-page order quotes precedents for justifying its stance. The order disposes of several applications, most of which deal with claims made by various creditors. Among them, Standard Chartered Bank, a dissenting financial creditor got some relief. It sought to quash the resolution that approved the resolution plan, and in the alternative, receive equitable treatment under the resolution plan.  It was stated that SCB got only 1.7% of its total dues while other financial creditors were receiving around 92%.

While the NCLT declined to quash the creditors’ committee resolution approving the resolution plan, it ruled against this unequal treatment of distribution amongst financial creditors and ordered a pro-rated distribution of resolution amount between all financial creditors.

The promoters further sought to quash the resolution arguing their right to receive a copy of the resolution plan citing a recent Supreme Court judgment.  The NCLT noted that at the time of approval of the resolution, the NCLAT direction was in place which was, in fact, the opposite, as it did not require suspended management to access the resolution plan. The Bench further noted that, the promoters had anyway offered for settlement and were evidently well aware of the contents of the approved resolution plan. In such a case, it rejected the plea for remitting the case back to the creditors.

The approved resolution plan further sought various exemptions such as stamp duty, fees, transfer charges, transfer premium etc. The NCLT held that it is not in a position to grant these exemptions and that the resolution applicant will have to make appropriate submissions to the respective departments of the government.

The NCLT provided a time frame of 1 year to the resolution applicant to obtain various approvals and exemptions. It also found that those parts of the resolution plan which are severable in this regard will be severed if unsuccessful.

As published by Bar & Bench

NCLT order 

MC:PNB, BOI say recovery from Essar Steel resolution likely in March

14 March 2019: Top lenders involved in Essar Steel debt resolution on March 14 said the final decision and recoveries from the account are likely by the end of the month. 

“Decisions on Essar Steel have been taken decisively. Hope to resolve it by March 31,” said Sunil Mehta, Managing Director and Chief Executive Officer, Punjab National Bank (PNB). He was speaking to reporters on the sidelines of an event in Mumbai. 

According to reports, PNB expects to recover about Rs 2,500 crore from Essar Steel.

A top official of another lender also sounded optimistic on the recovery before the bank closes the books for the current financial year on March 31. 

Dinabandhu Mohapatra, Managing Director & Chief Executive Officer, Bank of India (BOI) said the lender is “quite hopeful” of recovery in Essar Steel. He expects a writeback of more than Rs 1,800 crore from the account. 

“We are expecting big recoveries. Our provision coverage ratio is among the highest in the industry at 76.7 percent and in some cases we have made 100 percent provisions and we are hopeful to write back directly to our profit,” Mohapatra told reporters today. 

NCLAT hearing on March 15 

The National Company Law and Appellate Tribunal (NCLAT), that was scheduled to hear the petition moved by promoters of Essar Steel against National Company Law Tribunal (NCLT) Ahemdabad’s ruling on March 14, has adjourned it for a day. 

The NCLT Ahmedabad had on March 8 approved ArcelorMittal’s bid of Rs 42,000 crore to takeover Essar Steel. It had also suggested the Committee of Creditors (CoC) share 15 percent of the bid amount with operational creditors. 

Mehta said lenders will take a call after studying the order and the call on apportionment of dues will be taken after the lenders’ meet. “We have to see various aspects of the order,” he said.  

Money Control reported

BS: MCA may order management change in Essar Steel

14 March 2019: After more than a year, the long-drawn resolution process of Essar Steel seems to be finally moving towards closure with the Corporate Affairs Ministry ready to order a change in the management of the insolvent steel maker.

The move comes even as a fresh petition was filed before the National Company Law Appellate Tribunal (NCLAT) by Essar Steel MD Prashant Ruia, Essar Group executives, as well as the Standard Chartered Bank, seeking to set aside the ArcelorMittal’s winning bid approved by the Ahmedabad bench of the NCLT.

The resolution plan for Essar Steel, which has been facing bankruptcy proceedings since August 2017, was approved by the National Company Law Tribunal (NCLT) last Friday. It accepted ArcelorMittal’s Rs 42,000 crore bid for the debt-laden steel maker.

Official sources said the MCA is waiting for the written order from the NCLT after which it would approve and order a management change in Essar Steel. “This may take a day or two,” said the source.

The legal contentions against the takeover can continue later, said the official.

The NCLAT is set to hear the petitions against ArcelorMittal’s winning bid on Thursday. The appellate court’s order is awaited.

The NCLT’s decision paves the way for world’s largest steel maker ArcelorMittal’s entry into India. The steel company run by steel baron Lakshmi Niwas Mittal has been trying enter the Indian market for more than a decade.

Indian-born Mittal’s steel company is the world’s largest by volume but, ironically, doesn’t have a steel plant to its name in his homeland.

The NCLT bench approved ArcelorMittal’s resolution plan, which was voted as the winning bid in October 2018 by the Committee of Creditors (CoC) and which included an upfront payment of Rs 42,000 crore and a post-deal infusion of Rs 8,000 crore in Essar Steel.

The NCLAT had last month directed the NCLT Ahmedabad bench to take a final decision on ArcelorMittal’s bid for the acquisition of Essar Steel by March 8, failing which it would pass an order itself.

While the NCLT verdict came as a major setback to the Ruias, who wanted to retain control of the company and had offered Rs 54,389 crore after the CoC approved ArcelorMittal’s bid, the promoters of Essar Steel believe they still have a chance.

The Ruias are not yet ready to surrender the 10-million tonne steel mill, which owes Rs 49,000 crore to financial creditors. They have filed an appeal in the NCLAT and if needed, may even approach the Supreme Court. Essar’s earlier appeal in these courts had been dismissed.

ArcelorMittal, in a joint venture with Japan’s Nippon Steel & Sumitomo Metal Corp., has offered an upfront cash settlement of Rs 42,000 crore to lenders and a Rs 8,000 crore capital infusion.

The world’s largest steel maker is also planning a Rs 18,697 crore capital expenditure programme for the asset till 2024, according to its 2018 annual report.

In its order, the NCLT has also ordered ArcelorMittal to offer 15 per cent of the upfront cash settlement of Rs 42,000 crore, or Rs 6,300 crore, to operational creditors.

The original resolution plan only offered Rs 196 crore to operational creditors against claims of Rs 4,976 crore. The NCLT order means financial creditors — “the banks” — will have to take a deeper haircut on the asset.

The Business Standard reported

ET: Lenders sell 12 cr shares of Reliance Communications

14 March 2019: Lenders of Anil Ambani-led Reliance Communications Wednesday sold 12 crore pledged shares, which accounted for 4.34 per cent stake of promoters in the telecom firm. The sale was a result of lenders invoking shares pledged with them.

The pledged shares belonged to promoters including that of Ambani, his family members and RCom group entities, according to a BSE filing.

With this sale of shares, promoters’ stake in the company has come down to 37.57 per cent from 41.91 per cent earlier.

At the current market price, the value of stock sold comes around Rs 59 crore.

The company has been reeling under a debt of around Rs 47,000 crore and has opted for invoking bankruptcy proceedings. The matter is sub-judice.

The shares of RCom on Wednesday closed at Rs 4.91 a unit, down by 4.1 per cent, at the BSE.

The Economic Times reported

CNBC TV18: Jet Airways flying 61 aircraft currently, says government official

14 March 2019: Jet Airways is currently flying a total of 61 planes, a drop of nine planes from the last tally provided to the Directorate General of Civil Aviation (DGCA), a senior government official told CNBC-TV18.

The airline has a total fleet of 119 planes, as per the latest data available on its website. Hence, 58 planes or 49 percent fleet of Jet Airways is out of operations.

Last week, a senior official in the aviation ministry had said that Jet Airways was operating a total of 70 planes.

This comes at a time when the airline is desperately seeking a way out of its financial crisis and increasing burden of outstanding dues.

Naresh Goyal, the airline’s founder, had also recently sent a distress call to Etihad Airways chief executive officer Tony Douglas, seeking interim funding support of Rs 750 crore this week for the survival of the airline, which he said “is in a precarious situation”.

“It must be reiterated that non-receipt of interim funding will be severely delirious to the future of the airline, leading to its grounding, which is something all of us, including the banks and other stakeholders, have worked assiduously to avoid over the last few months,” Goyal wrote to Douglas in a letter dated March 8.

Goyal had also said that the airline has over 50 planes on ground and increasing arrears of vendors and salaries to employees makes the need for interim funding all the more imperative.

“Aircraft lessors have been supportive of the company’s efforts in this regard. The company is also making all efforts to minimise disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The company also continues to provide required and periodic updates to the DGCA in this regard,” the Mumbai-based airline has said in an exchange filing.

Not only has the cash-strapped airline been able to pay its lessors for as long as 5-6 months, leading to grounding of planes, payment of salaries to pilots has also been pending since November.

The situation has been getting murkier for the airline as the rescue plan or the SBI-led debt restructuring programme for funding infusion is still not in place even after approval by the company board on February 21. While a board meeting of Etihad took place on Monday, the outcome is yet to know.

CNBC TV18 reported

FE: With Patanjali offer good to go, Ruchi Soya creditors may forfeit Adani’s Rs 50-cr deposit

14 March 2019: Lenders to the debt-laden Ruchi Soya, currently undergoing corporate insolvency resolution process, are considering forfeiting the Rs 50-crore earnest money deposit paid by Adani Wilmar as it has withdrawn from the process in January, citing a delay in the resolution process.

One lender aware of the development told FE on condition of anonymity: “The Patanjali plan was discussed at the meeting last week with most lenders seeming in favour. Barring a few details that are to be discussed and the formal voting, Patanjali offer seems good to go. Meanwhile, lenders are of the view that Adani was not fair in the process.”

A majority of the consortium of creditors (CoC) with exposure to Ruchi Soya has given their informal nod to Patanjali’s improved offer that promises financial lenders upfront payments of Rs 4,350 crore, against Rs 4,100 crore earlier, along with Rs 1,700 crore in fresh infusion into the company, the lender said.

“We would like to affirm that the resolution plans are being re-considered by the CoC pursuant to the Supreme Court order and not yet approved. Any further information on the resolution plan is strictly confidential in nature,” the company said in an exchange notice on Wednesday.

Back in August, more than 96% of the creditors had reportedly voted in favour of Adani Wilmar’s resolution plan for the insolvent Ruchi Soya that included a payment of Rs 4,300 crore to financial creditors and around Rs 1,700 crore equity infusion in the company. However, in January Adani Wilmar informed the Mumbai bench of the NCLT of its decision to withdraw citing delays in the resolution process.

The Financial Express reported