The proposed transaction by Lakshadweep, a JV between Suraksha Asset Reconstruction Company and Mumbai-based Dosti Reality, will result in the eventual delisting of Jaypee Infratech as almost all its equity capital will be written off, said two people familiar with the development.
“The JV has outdone other leading contenders by a huge margin with a Rs 7,350 crore bid,” said one person.
Other bidders for the company were the Adani Group and a consortium that includes Kotak Realty. Suraksha Asset Reconstruction is promoted by Sudhir V Valia, the brother-in-law of Shanghvi and an executive director on the board of his company, Sun Pharmaceutical Industries. Dosti Realty is a real estate company promoted by Shanghvi’s cousin Deepak Goradia. It provided homes to 8,600 families and has a portfolio of 9.5 million square feet across Mumbai, according to its website. Valia could not be reached for comment.
Goradia, managing director of Dosti Realty, declined to comment.
“The committee of creditors has preferred the bid of Lakshadweep, which was further negotiated and revised upward on Wednesday,” said one person. Lakshadweep had initially offered Rs 6,900 crore, which was revised to Rs 7,350 crore, the person said.
Jaypee Infratech has outstanding loans of about Rs 8,500 crore. With the Lakshadweep offer, the banks may be able to recover over 80% of their dues, said one of the lenders.
Under the proposed transaction, Lakshadweep will make an upfront payment of Rs 1,200 crore to the banks, the second person said. It has earmarked Rs 4,000 crore to be paid from the sale of land and another Rs 2,000 crore will be converted into long-term non-convertible debentures. A small equity stake is also part of the offer. “The lenders will have a combined equity stake of 3.5% in the company and the balance will be with the acquirer,” said the second person. All the existing equity capital of the company will be written off, thereby delisting the company, he added.
Lakshadweep will also put in the funds needed to complete the construction of apartments in Noida, the people said. “The JV will have to complete the unfinished flats in Noida, which faces a shortfall of about Rs 2,000 crore,” one person added.
Lakshadweep’s offer is superior to the Adani Group’s bid of about Rs 6,000 crore, said one person.
“Lakshadweep’s bid was more flexible,” he added.