Lenders of the embattled company are expected to meet on April 26 to discuss the revised bids of NBCC and Suraksha Group.
NBCC and Suraksha Group, who have been asked to sweeten their offer for acquiring Jaypee Group's realty arm and completing over 20,000 housing units, have submitted their revised bids, sources told Moneycontrol.
April 25 was the last date of submitting the revised bids. Bidders were asked to sweeten the offer at the Committee of Creditors meeting held on April 16.
Lenders of the embattled company are expected to meet on April 26 to discuss the revised bids of NBCC and Suraksha.
Sources privy to the details of the bids say major 'irritants' have been removed.
In its previous bid, NBCC had offered 1400 acres of land worth Rs 6,000 crore and equity infusion of Rs 500 crore upfront. In the revised bid, it has offered 950 acres of land worth Rs 5,001 crore and reduced the equity infusion from Rs 500 crore to Rs 200 crore, sources said.
For secured financial creditors, it has offered a payment of upfront amount of Rs 1500 crore, 100 percent in Yamuna Expressway SPV, 100 percent in land bank SPV. The land bank SPV is worth Rs 5001 crore and totals 950 acres, they say.
Suraksha had earlier offered about Rs 20 crore as upfront payment but in the revised bid, it has now proposed an equity infusion of Rs 50 crore and a working capital loan of Rs 3,000 crore against a requirement of Rs 2404 crore to complete construction work, sources said, adding their completion timelines are on an average one year less than NBCC.
Projects to be completed in three years
In the previous bid, NBCC had promised to deliver flats to homebuyers in four to five years from the transfer date, subject to the availability of the cash flows from the respective projects. At a meeting held with homebuyers on March 11, state-owned NBCC had assured Jaypee homebuyers that it would deliver the projects within three years along with amenities promised.
In the revised bid, NBCC has reduced the delivery timelines by one year for several projects which means that most projects will be completed by 2023.
Will buyers have to pay additional charges?
Buyers had earlier demanded that NBCC must provide a specific undertaking that there would be no cost escalation.
Sources said that the revised resolution plan submitted by NBCC proposes that homebuyers may be liable to pay additional charges at the agreed per sq ft rates if the area of the flat finally delivered to the buyer is more than the area agreed with the homebuyer. Also, if the flat finally handed over to the homebuyer is less than the area agreed with the buyer, then a pro rata amount would be adjusted from the amount payable by the buyer at the per sq ft amount agreed earlier.
At the meeting held with NBCC officials in March, homebuyers had demanded that the company provide a specific undertaking that there would be no illegal increase in super area for any of the units or projects under any circumstances and no deviation from the original plans.
Swapping of units
Another concern raised by homebuyers with regard to NBCC’s earlier bid was with regard to swapping of their units. The revised bid talks of change of units mainly for the project located in Mirzapur and mentions that in case it is required for Noida, consent of concerned homebuyers will be taken and decision taken on mutually agreeable terms and conditions, sources said.
Issue of delay compensation
On the issue of delay in compensation, NBCC had in the March 11 meeting promised to honour 25 percent of the contracted delay compensation (Rs 5 per sq ft). The revised bid states that the delay penalty would be paid on same terms as earlier subject to receiving Rs 750 crore that had been deposited by the company in the Supreme Court registry, sources said.
NBCC has proposed payment of delay penalty at the rate of 25 percent of amount due till the insolvency commencement date in case Rs 750 crore deposited in the Supreme Court registry by Jaypee Group is available to it. It has also proposed payment of delay penalty at the rate of Rs 5 per sq ft per month to be payable after expiry of the moratorium period of one year from the delivery dates.
Sources said that NBCC has proposed that any payment of delay penalty may be made only at the time of final handover of the flats to buyers and that it would be adjusted against the final amount due from them.
It has also proposed that homebuyers who have not filed their claims will also be provided delivery of flats and be treated in a manner similar to other homebuyers, sources said.
It has proposed that the entire claim of the refund seekers will be settled by an upfront payment of about Rs 60 crore.
Sources said that both the bids seem to have been sweetened and most concerns addressed. "The only issue here is that Suraksha is not putting its own money in this resolution plan and has limited it to Rs 50 crore .That shows lack of seriousness on their part to take on risks and reap the rewards in the future. NBCC on the other hand seems evaluated the concerns seriously and drawn up a laundry list to identify all problems," sources said.
Business conglomerate Adani Group had also entered the fray by putting in a bid to acquire Jaypee Infratech. On April 26, lenders will also have to decide whether the company would be allowed to enter the race at this stage.
The National Company Law Tribunal (NCLT) in 2017 had admitted the application of a consortium led by IDBI Bank seeking resolution of Jaypee Infratech, and appointed 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.
Last week, Manoj Gaur, promoter of embattled real estate firm Jaypee Infratech, had once again offered to complete the much-delayed real estate projects within a period of four years by pumping in Rs 1,500 crore in an escrow account. Homebuyers were, however, skeptical and termed the meeting held on April 19 as an 'eyewash', 'old wine in new bottle' and questioned the timing of the meeting saying that the meeting was called to garner support from buyers whose approval is required for any resolution plan or settlement plan to go through.
Gaur during the meeting with homebuyers claimed that he was a 'victim of circumstances', made a presentation and proposed that Rs 1500 crore would be set aside in an escrow account for completion and construction of the projects that are proposed to be completed within four years.
Briefing reporters on the sidelines of the meeting, Ajit Kumar, adviser Jaypee Group, said that the company is aware of the problem faced by homebuyers.
"We have submitted a proposal under Sec 12A of the IBC procedure in April. To begin with, we will set aside Rs 1500 crore in an escrow account, which will be monitored by a committee. The entire amount will be used for construction and completion of the houses. The monitoring committee would constitute a retired judge of a Supreme Court, a technical member and I will be the convenor," he had said.
As many as 22,000 homebuyers are stuck because of significant delay in delivery of flats by Jaypee group's debt-ridden firm Jaypee Infratech, which is undergoing insolvency proceedings.
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 firstname.lastname@example.org