Kotak Investment Advisors, one of the bidders for Jaypee Infratech, is now reluctant to invest in equity.
The firm, which provides investment management and advisory services, has told the committee of creditors it is uncomfortable being an equity holder in debt-ridden Jaypee Infratech. “Kotak is highly uncomfortable in taking any equity stake in Jaypee Infratech,” the company said in a recent meeting of creditors.
Kotak Investment Advisors sought clarification on whether the existing shareholders could continue in the company and if the lenders could hold a stake in it.
IDBI Bank, one of the lenders, said according to the Insolvency and Bankruptcy Code, existing shareholders could not continue and a change of management was needed, and lenders were not in the business of holding equity.
The resolution professional said the bidder had to take ownership of assets because there was a long-pending obligation of constructing homes. Offers of possession for 9,182 houses have been given to homebuyers as of January 11, 2019. Of those 4,251 were offered during the resolution process. Properties are in Wish Town project in Noida.
An e-mail sent to the company went unanswered.
Business Standard has reviewed the minutes of the meeting in which potential bidders such as NBCC, Kotak Investment Advisors and Cube Highways & Infrastructure Pte Ltd, bankers and other creditors were present.
Kotak asked the resolution professional if it could partner another bidder, to which the legal advisor to the resolution professional said there was no such restriction on two bidders coming together and submitting a plan.
Also, during the meeting, differences arose between NBCC and creditors over upfront cash infusion into the company, with NBCC arguing that this should not be a criterion for selecting a bidder.
However, the resolution professional said there should be a guarantee that the chosen bidder would make payments as promised.
“Lenders have to be assured of the ability of the bidder to raise money to deliver what was promised in the resolution plan,” the resolution professional’s legal advisor said in the creditors’ meeting.
The deadline to submit proposals to revive the realty firm has been extended till February 15, Jaypee Infratech said in a regulatory filing.
Source: Business-Standard