Jaypee Infratech case: CoC asks NBCC for clarifications on exit clauses, financing
Financial Express: Rishi Ranjan Kala: May 10, 2019
The committee of creditors (CoC) of Jaypee Infratech (JIL), which met on Thursday, directed NBCC to furnish clarifications in writing about exit clauses that the state-run company has made in its revised bid and also inquired whether there is an alternative available. The panel also wants NBCC to inform about the avenues that it has at its disposal for arranging funds to infuse in the cash-strapped real estate firm.
During the CoC meeting, a majority of members were of the view that NBCC should drop the exit clauses as it creates uncertainty about the firm’s commitment to complete the housing projects as well as claims of the lenders, sources said.
“Today CoC directed NBCC to come back with clarifications on some issues by Monday (May 13) and the next meeting is scheduled on May 14. CoC sought clarifications on relief and concessions sought by NBCC. These exit clauses are not acceptable to many members,” one of the sources said.
Besides, the public sector undertaking also has to inform the panel about how it will manage the funds that it is proposing to infuse as per its revised resolution plan. “It is known that government companies take a lot of time in getting clearances and the CoC wants to be sure that the project should not suffer due to this,” he added.
Another source said, “Now CoC will consider NBCC’s responses and decide whether there will be voting on the revised bid. It will decide whether the bid is acceptable”.
The issue of exit clauses and concessions came after JIL’s resolution professional (RP) Anuj Jain informed the CoC earlier this month that NBCC’s revised bid is conditional as the firm has said that its plan will not be binding unless two key relief mentioned in Schedule 3 (Reliefs & Concessions) are granted.
NBCC sought relief from taking consent of Yamuna Expressway Industrial Development Authority (YEIDA) for any business transfer between JIL and Yamuna Expressway SPV for transfer of assets as well as land parcels from JIL to Land Bank SPV.
The other key relief is on an income tax liability. Due to transfer of land from YEIDA to JIL in terms of concession agreement, the income tax authority has been making an addition to the income of around Rs 2,950 crore annually, which on the basis of data available amounts to an estimated Rs 33,000 crore for 10 years as tax demand. NBCC wants this liability to be “extinguished”.
In its revised resolution plan, submitted in April, NBCC offered to pay secured financial creditors admitted claim by way of an upfront payment of Rs 1,500 crore and transferring land worth Rs 5,000 crore. The remaining Rs 3,283 crore is proposed to be paid by transferring 100% shareholding of the Expressway SPV.
Homebuyers would get only their completed housing units at no extra cost, but not any money in lieu of their Rs 13,389 crore admitted claims. However, it has committed to pay only Rs 20 crore or a little over 4% of the operational creditors’ Rs 464.20 crore admitted claim.
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