JSW group plans to tie up with Suraksha Realty for Jaypee real estate

JSW Infrastructure could bring in additional financial support that could be potentially used to complete the real estate projects, a source says
JSW group is in an advanced stage of talks with Mumbai-based Suraksha Realty to provide it financial and technical support as the latter submitted its final bid to acquire Jaypee Infratech through the insolvency process. 

Suraksha and state-owned NBCC are among the two bidders that submitted bids on Tuesday. According to sources, discussions are on between the realty company and JSW group company JSW Infrastructure. 

The entry of JSW as a backer to the realty company provides a new twist to the long process to find a buyer for Jaypee Infratech which went into insolvency in August 2017. JSW Infra will also provide technical expertise in building and operating infrastructure assets. However, a JSW group spokesperson declined to comment on the issue.  

Sources say Suraksha has already tied up Rs 2,000 crore funds for the asset with Standard Chartered Bank. JSW Infrastructure could bring in additional financial support that could be potentially used to complete the real estate projects, a person close to the development said. The homebuyers constitute nearly 57.8 per cent of voting on the resolution plan of Jaypee Infratech. 

According to the revised Insolvency and Bankruptcy Code (IBC) process, homebuyers have significant voting rights in the resolution process. The homebuyers are expected to cast their votes for the preferred resolution plan from December 8 to 11.

The committee of creditors (CoC) had earlier asked both the bidders to sweeten their offers and submit revised bids by December 3. 

The CoC is expected to meet in a few days to consider the two bids. The proposal from Suraksha entails that it give delivery of flats to home buyers in three years. In case of delay of more than nine months, the company would provide a delay penalty of Rs 10/sq ft to the homebuyers. Moreover, for homebuyers who have already cancelled their flats, Suraksha Realty has said it would give refunds within three years. 

It has also made it clear that it will not hive off the road assets from the main company. The road assets currently make an operational profit of Rs 350 crore. Jaypee Infratech has development rights over 6,175 acres along the Yamuna Expressway. 

The company still has over 3,500 acres yet to be developed. It has launched more than 37,000 units in Noida, Mirzapur and Agra which are yet to be completed fully. Over 20,000 homebuyers have been affected ever since the company filed for bankruptcy. In the revised plan, Suraksha Realty has offered lenders 2,220 acres of land worth Rs 9,800 crore for debt swap.

Jaypee Infratech, a subsidiary of crisis-hit Jaiprakash Associates, went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium.

In the first round of insolvency proceedings conducted last year, Rs 7,350-crore bid of Lakshdeep, part of the Suraksha group, was rejected by the lenders. The CoC rejected the bids of Suraksha Realty and NBCC in the second round held in May-June 2019.

Following this, on November 6, the Supreme Court directed completion of Jaypee Infratech’s insolvency process within 90 days and said the revised resolution plan will be invited only from NBCC and Suraksha Realty. Homebuyers claim amounting to over Rs 13,000 crore has been admitted, while banks claim amounts of nearly Rs 10,000 crore.

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