NBCC may up offer to banks for Jaypee Infra

NBCC may up offer to banks for Jaypee Infra
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New Delhi, Mar 14: Public sector player NBCC is expected to sweeten its offer to lenders for Jaypee Infratech to address their concerns over a high haircut as the resolution plan for the company under insolvency action enters the final lap.
By all indications, NBCC appears set to bag the high-profile entity comprising over 30,000 residential units, an expressway and a hospital. Sources said that NBCC may offer to acquire a small stake in the special purpose vehicle (SPV) to take over the Taj Expressway and also develop 1,000 acres lying with lenders by promising to service it till the end and offer an upside to banks. Lenders led by IDBI Bank are due to meet on Thursday to hear the pitch from both the bidders — NBCC and Suraksha Asset Reconstruction Company.
The move is meant to address concerns that banks will have to bear a burden of around Rs 2,000 crore as stamp duty and income tax on swapping land for bank loans and GST on toll revenue from the SPV once they take over the company running the expressway. Besides, banks have estimated a hit of another Rs 2,000-2,500 crore on contingent liabilities.
What is working in NBCC’s favour is the support from the government, which is keen that lenders back the PSU’s proposal, as well as home buyers, who were assured earlier this week that their flats will be delivered in three years and there will be no cost escalation that was earlier proposed. Besides, the lenders are not seeing any significant upside in the rival bid from Suraksha ARC, which also entails a haircut on the loan exposure of around Rs 10,000 crore.
Sources said even if the deal is clinched immediately it may take a few months to get the required clearances from the state government.
NBCC’s proposal involves a mix of upfront payment, swapping of loans with a part of the land bank and transferring expressway SPV to raise Rs 2,500 crore, of which Rs 1,500 crore will be used to get the under-construction flats ready, while rest will flow to banks.