PremiumAfter bidding for engineering, procurement and construction (EPC) company KSS Petron Pvt. Ltd, Mauritius-based Royale Partners Investment Fund (RPMG Investment) has thrown its hat in the ring to acquire debt-laden Lavasa Corp. Ltd, a subsidiary of the BSE-listed Hindustan Construction Co. Ltd (HCC).
Lavasa, the country’s first privately-developed city, around 180km from Mumbai, has started the corporate insolvency process under the insolvency and bankruptcy code (IBC). It was admitted for resolution by the Mumbai bench of the National Company Law Tribunal (NCLT) on 30 August 2018. The company was then held jointly by HCC (68.7%), Avantha Group (17.18%), Venkateshwara Hatcheries Pvt. Ltd (7.81%) and Vithal Maniar (6.29%). “Royal Partners Investment Fund has submitted an expression of interest for Lavasa Corp. Ltd," said one person close to the development, requesting anonymity. “There are other resolution applicants (bidders) as well, including a few Maharashtra-based realty developers."
According to Lavasa’s website, it owes more than ₹6,200 crore to its financial creditors and more than ₹400 crore to 840 homebuyers. The company owns about 20,000 acres in Maharashtra. A government registered valuer has estimated the land price at ₹9,280 crore.
A Royale Partners Investment Fund spokesperson confirmed the development. “We confirm that we have successfully submitted an expression of interest for Lavasa Corp. The law firm advising us is Khaitan and Co. This bid is led by our chairman himself." He, however, did not divulge the valuation and other financial details pertaining to the bidding process.
According to HCC Ltd, Lavasa’s parent, the project has been suffering on account of regulatory hurdles. On the day of admission of the insolvency petition, HCC had informed the stock exchanges that the project was severely impacted by a ministry of environment notification to stop work for jurisdictional reasons and not for environmental infractions.
“The consequent delay of 1.5 years in obtaining clearances affected the project and brand Lavasa in many ways. Operations slowly came to a standstill due to paucity of working capital and caused Lavasa’s investors and partners to step back or defer their investment plans," the company had said.
Further, delayed implementation of an approved joint lenders’ forum (JLF) financial restructuring plan resulted in the project remaining stalled for another 2.5 years. “On 20 September 2017, lenders decided to invoke strategic debt restructuring (SDR). However, RBI’s revised guidelines on stressed assets dated 12 February disbanded all earlier restructuring schemes." the statement added.
At the time of admission to the resolution process, HCC had reported a net loss of ₹1,525 crore for the second quarter of 2018-19, against a net profit of ₹11 crore in the same period a year ago.
In its regulatory filing, HCC has written off ₹1,046 crore, or its entire exposure to Lavasa Corp., and HCC Real Estate Ltd, its wholly owned subsidiary, which holds 68.7% in Lavasa Corp.
An email query to Shailesh Verma of Deloitte, the resolution professional for Lavasa, remained unanswered till press time. Ajit Gulabchand, chairman and managing director, HCC, was not available for comment.
