17 June 2019: Lenders to Jaypee Infratech are now working on an alternative resolution plan for the bankrupt firm, which involves creation of a special purpose vehicle to securitise highway toll receivables from Yamuna Expressway for fresh investments which would be used for completion of the housing projects.
The returns from sale of the completed flats would then be used for reducing the lenders’ existing liabilities, a senior banker aware of the developments told FE.
“An investment of Rs 2,500-3,000 crore is required to complete the pending housing projects. However, with existing lenders unable to put in fresh money, at least three parties, including Deutsche Bank and Cube Highways, have been approached to invest funds against receivables of the toll money from the highway over say, 10 years or so. These funds will be used to complete housing projects,” the banker said.
“Lenders expect money on sale of the completed flats. Since as of now, on average, the buyers have only paid 30%-40% of the total amount and almost 80% homebuyers have shown interest to take possession of their flats on completion; the money that comes through sale of these flats, can be used by the lenders to extinguish their current liabilities. This entire plan is envisaged to unfold over the next 5-10 years,” the banker added.
As per the plan, learnt to have been suggested by IIFCL, one of the lenders within the consortium, bankers will be owners of the above-mentioned SPV, indicating that the liability of any investment made by investors against securitisation of toll money will lie with the lenders.
The above-mentioned plan also involves creation of a second SPV that could help monetise any parcels of land that are offered in lieu of debt. When the plan is fully formulated and finds takers, lenders will approach the National Company Law Tribunal with the proposal for its approval.
In the meantime, lenders are also valuing a prospective bid submitted by Adani Group, the banker said, without spelling out any details. The next meeting of the committee of creditors is scheduled to be held on June 20. In 2017, Jaypee Infratech was admitted into the insolvency process by the National Company Law Tribunal (NCLT) based on application by an IDBI Bank-led consortium.
In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshadweep, part of the Suraksha Group, was rejected by lenders. Later in October 2018, the interim resolution professional started the second round of bidding process to revive JIL on the NCLT’s direction. Earlier this month, a majority of lenders voted against state-owned NBCC’s bid, after the National Company Law Appellate Tribunal (NCLAT) clarified it hadn’t barred lenders from voting against the plan.