Private equity investors JM Financial and the Mauritius-based SRS Orion Investments, which invested Rs 600 crore in Maytas Properties early 2008, are seeking government intervention to recover their investment after the property firm failed to return the funds despite an arbitration award in favour of the investors.
In a letter dated November 4 to the Company Law Board, ministries of finance, corporate affairs and commerce and industry, the PE investors have requested the government to assist them in the recovery of over Rs 900 crore, including the principal and the interest as directed by the arbitrator, due to them from Maytas Properties.
In January-February 2008, the PE players subscribed to compulsory convertible debentures worth Rs 600 crore in Maytas Properties, managed by Satyam’s disgraced founder B Ramalinga Raju’s son B Rama Raju, for development of real estate projects in India. “During and after September 2008, the management and the board of Maytas Properties committed material breaches of the investment agreement and misused more than Rs 250 crore of the investors’ monies by transferring them out of the company without our consent, and then giving us misleading information about the use of funds,” the PE investors, who are the largest shareholder group in the company after the promoter, have alleged in the letter.
On account of the alleged breach, PE investors sought refund of principal and interest due to them, but a non-payment led to the matter being referred for arbitration to former chief justice of India MH Kania.
In August, the arbitrator directed Maytas Properties to pay Rs 600 crore with interest at the rate of 30% per annum till the date of award, and 18% thereafter until payment, which now comes to over Rs 900 crore, according to the letter.
Following the directive, the investors agreed to acquire land owning group companies, instead of money, as Maytas was not in a position to pay cash. But, as per the letter, the investors soon realised that land on offer was provisionally either attached by the Directorate of Enforcement, Hyderabad, or income tax authorities, leaving them with little option.
“We are looking at a way to resolve this issue and are seriously considering this case. I cannot comment on this matter now as it is currently under litigation,” said Ved Jain, a government appointee on the board of Maytas Infra.
Source: Economic Times