IIFCL tears into Jaypee Infra bid evaluation process, calls for fair review

New Delhi, Apr 22: A key lender to bankruptcy-hit Jaypee Infratech has ripped apart the bid evaluation process followed by the resolution professional conducting the auction of the firm, saying it has “serious deficiencies and shortcomings”.
India Infrastructure Finance Co Ltd (IIFCL), which has claims of about Rs 9 billion (Rs 900 crore), or 10.57 per cent, of Jaypee’s total debt, wants a “fair and transparent” process adopted and the current evaluation that pegs the company’s worth at less than half of its market value of Rs 171.1 billion (Rs 17,110 crore) be “summarily scrapped”.
IIFCL, in a letter to the resolution professional, tore into its valuers assuming much less toll collections from Jaypee-built expressway.
“The valuation conducted by the lenders consortium recently during 2017, the pessimist scenario for the toll collection from the expressway aggregate to Rs 67,980 crore (Rs 679.8 billion) during the remaining concession period ie from April 2018 to August 2048”, it wrote.
“Considering a discounting factor of 8 per cent per annum, the net present value (NPV) works out to Rs 15,426 crore (Rs 154.26 billion). However, the valuer had assigned a valuation of Rs 2,395 crore (Rs 23.95 billion) only,” it pointed out.
IIFCL said when it enquired about the basis of arriving at such low valuation, “no credible explanation has been offered”.
“The valuation reports need to be revised reflecting the true and fair valuations,” it said.
The distress sale value of the land the company has is also at a huge variation with the valuation carried out earlier, it said.
It went on to state that the scores assigned by Deloitte and IDBI Capital, who are advising the Committee of Creditors on evaluation of bids received for sale of Jaypee, have been “arbitrary and fair practice have not been adopted”.
“The opaque process adopted and denying the information/details to committee of creditors (CoC) members even after furnishing separate non-disclosure agreements (NDA) is viewed with concern,” IIFCL said.
“We also condemn the unfair and unjust method adopted by CoC advisors, which make us to presume that we are forced to favour certain applicant (bidder) while rejecting better offers from others,” it added.
The lender asked the resolution professional to exercise “utmost caution” and adopt “a fair and transparent process”.
“The evaluation matrix prepared by the CoC advisors be summarily scrapped,” it said, adding, “The bid evaluation process followed have serious deficiencies and shortcomings and the same need to be rectified immediately.”