Mantra Properties, Ashdan Developers in final race to acquire DS Kulkarni under insolvency process

Realty developers Mantra Properties and Ashdan Developers are in fray to acquire Pune-based real estate developer D S Kulkarni Developers through the ongoing insolvency process with separate bids of over Rs 800 crore each, said persons with direct knowledge of the development.
While Mantra Properties has bid Rs 880 crore, Ashdan Developers has bid Rs 827 crore in the third revision of their plans to acquire the debt-laden company and its projects.

The Committee of Creditors (CoC) is expected to take a final call on both the resolution plans this week.

“Both the bidders have revised their bids at least three times so far. The resolution professional had asked them to revise it one more time earlier this week and the fourth revision was submitted on Tuesday,” said one of the persons mentioned above.

A total of over 700 homebuyers across five stalled projects are awaiting possession of their homes.

Based on their third revision of the plan, Mantra Properties has offered to hand over possession to these homebuyers in around 40 months, while Ashdan--a consortium led by Solitaire Group--has sought up to 54 months for the same.

Resolution professional Manoj Kumar Agarwal declined to comment for the story.

Calls and text messages to Mantra Properties CEO Rohit Gupta and Solitaire Group’s Chief Financial Officer Harshil Shavdia remained unanswered.

Based on an application filed by lender Bank of Maharashtra, the Mumbai bench of National Company Law Tribunal (NCLT), in September 2019, had ordered the commencement of corporate insolvency resolution process (CIRP) with respect to debt-laden D S Kulkarni Developers under the provisions of the Insolvency and Bankruptcy Code, 2016.

The insolvency resolution is now in its final lap and is expected to be concluded in the next few weeks.

The Insolvency Resolution Professional (IRP) had invited the bids in February and this will be one of the fastest resolutions under CIRP if, as expected, the closure is achieved soon.

Prior to the CoC’s decision later this week, both the bidders are expected to provide certain clarifications sought from them and the final selection is likely to be intimated in the next 7-10 days.

Lenders and operational creditors of the beleaguered developer have claimed around Rs 1,750 crore, of which nearly Rs 1,050 crore is from 12 banks and other financial institutions.

These financial creditors hold around 66.7% voting rights in the Committee of Creditors.

Apart from upfront payment, Mantra Properties has proposed to transfer land worth Rs 800 crore at Fursungi in Pune to a special purpose vehicle (SPV) to be set up for institutional financial creditors.

It will transfer the debt of institutional creditors to this entity, which will issue Optionally Convertible Debentures (OCDs) to them. These OCDs will be repaid by the land bank SPV over a period of five years.

Ashdan Developers, in addition to its upfront payment, will issue Non-Convertible Debentures (NCDs) worth Rs 707 crore, including principal and interest thereon, to secured creditors. These NCDs will be secured by 50% of net development plot in Fursungi and receivables arising therefrom. Ashdan will hold a call option to prepay these NCDs after one year.

The terms of the expression of interest were approved by the CoC in its meeting held on March 9 and a total 19 companies had shown initial interest in taking over the developer that has so far developed projects in Pune, Mumbai, Bengaluru, Nashik and New Jersey in the US.