Days before the voting on NBCC's resolution plan for Jaypee Infratech starts, the IDBI Bank-led consortium of lenders to the company has written to the state-owned firm setting terms for approval of its bid, sources aware of the development told CNBC-TV18.So far, in multiple rounds of negotiations between the banks and NBCC, the former has not modified the terms attached with its bid for the takeover of Jaypee Infra. With the board of NBCC set to meet on May 29, banks, through their legal advisor Cyril Amarchand Mangaldas, have sent a letter to the company asking it consider five key points, the sources said, requesting anonymity.
First, banks have asked NBCC to provide an undertaking from YEIDA (Yamuna Expressway Industrial Development Area) for the implementation of the resolution plan, for the proposed transfer of Yamuna Expressway along with related rights and obligations to the Expressway SPV (special purpose vehicle) and certain land parcels to the land bank SPV, if these approvals are not granted by the adjudicating authority, the National Company Law Tribunal (NCLT), the sources said. Second, according to the sources, the lenders have also asked NBCC to provide an undertaking from Income Tax Authorities for the implementation of the resolution plan, if the relief sought by the company extinguishing any future tax claims in its proposal, is not approved by NCLT. Third, the secured financial creditors led by IDBI Bank, have conveyed to NBCC that they would consider providing financial assistance to it for the unsold flats, but this assistance would have to be guaranteed by the government of India, explained sources. Fourth, instead of the 950 acres of land transfer proposed for a debt swap deal by NBCC, sources said banks have sought 1,426 acres of land instead. Fifth and last, banks have made it clear that any income tax or GST liability, or corporate tax liability arising in future on account of transfer of land parcels would have to be borne by NBCC and not the secured financial creditors, added sources.
If NBCC agrees to these terms, banks have promised their support for their bid. The voting on NBCC's resolution plan is set to start on May 31, as per NCLAT's orders.
Adani Group has submitted a non-binding bid for Jaypee Infra, sources told CNBC-TV18 on Tuesday, adding that the offer includes an upfront payment of Rs 500 crore and infusion of Rs 1,700 crore to complete projects for home buyers.
In 2017, Jaypee Infratech went into insolvency process after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium seeking revival of the realty firm.
Earlier, the committee of creditors (CoC) rejected a bid by Mumbai-based Suraksha Realty through a voting process. Later, the CoC decided to put on vote the NBCC’s offer even as bankers were opposed to this move citing certain conditions in the resolution plan submitted by the public sector firm.
On the bankers’ plea, the NCLAT had on May 17 annulled voting by homebuyers and lenders on NBCC’s bid and allowed renegotiation on the offer by May 30. The voting process could start from May 31.
Sources had earlier said that NBCC was unlikely to dilute certain conditions, including exemption from future tax liability, mentioned in its bid but the public sector firm was open to negotiating on the offer related to unsold flats.
Lenders have shown reluctance to acquire up to 2,207 unsold flats worth Rs 1,756 crore as proposed by NBCC in its revised offer.
In its latest offer, NBCC has proposed infusion of Rs 200 crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore as well as Yamuna Expressway to banks and completion of flats by July 2023 in order to settle an outstanding claim of Rs 23,723 crore of financial creditors.
With inputs from PTI.