Smart-city Lavasa receives two new bids offering Rs 25 crore upfront

Lavasa Corporation, India's first privately built smart city near Pune, has received two bids — both offering Rs 25 crore to Indian lenders as upfront money on dues worth close to Rs 8,000 crore.

Of the two bidders, Dhir Hotels and Resorts has offered to pay Rs 700 crore — to be paid from the third year until the seventh year of the effective date of approval from lenders, and in non-convertible debentures to be issued to banks.

The other bidder, Darwin Platform Infrastructure, too, has offered an upfront amount of Rs 25 crore, and another Rs 600 crore as deferred payment from the third year after receiving National Company Law Tribunal go-ahead.

According to lenders, despite a prolonged bankruptcy process, such dismal offers have come in and they do not have any other option but to send the company into liquidation. The deferred payment offers made by bidders, along with a relatively small upfront amount, mean the banks will have to take more than a 90 per cent haircut on their dues with no certainty on the realisation of the deferred payments, said a banking source. 

One of the bidders said the project has become unviable due to the impact of the Covid-19 pandemic on the real estate sector. “There were too many government-related permission issues and litigation risks in the project. That’s why we withdrew from the race,” said an executive of a company that had earlier evinced an interest in the project.

Lavasa, a subsidiary of Hindustan Construction Company (HCC), was sent for bankruptcy in 2018. Resolution deadlines have been missed several times so far. 

Axis Bank has made the highest claim of Rs 1,266 crore against the company. Among other key lenders is State Bank of India.

Originally set up in 2000, Lavasa was developed by HCC as a picturesque hill station near Pune. Lavasa defaulted on bank loans after the environment ministry issued a stop-work order on the project in 2010. HCC itself is facing a severe liquidity crisis and has defaulted on bank loans.

A few hotels in Lavasa city have shut shop since the outbreak of the pandemic; the weekend footfall in the township, too, has dropped to near-zero, turning it into a ghost town. In the current round, lenders have received better upfront amounts; earlier few bidders had offered only Rs 5 crore as upfront payment.

WHAT’S ON OFFER?

• Dhir Hotels and Resorts
• Rs 25 crore upfront; 
• Rs 700 crore to be paid from third year to seventh year of NCLT clearance
• Darwin Platform Infrastructure
• Rs 25 crore upfront; 
• Rs 600 crore to be paid from third year to seventh year of NCLT clearance