Games bailout plan ready
The Delhi Development Authority has finally worked out a bailout plan for Emaar-MGF, the project developer which had expressed difficulty to complete the project because of liquidity crunch, reports Moushumi Das Gupta.delhi Updated: Feb 18, 2009 13:27 IST
With time running out and pressure mounting to complete the Commonwealth Games Village in time, the Delhi Development Authority (DDA) has finally worked out a bailout plan for Emaar-MGF, the project developer which had expressed difficulty to complete the project because of liquidity crunch.
Emaar-MGF had written to the DDA in December asking for a loan of Rs 350 crore. The Games village will accommodate 8,500 athletes and delegates who are expected to participate in the games.
As per the proposed plan, the DDA will hold one-third (389) of the developer’s total share of 768 flats in the Games village on mortgage in lieu of the loan. The developer would have to return the loan amount within a time frame fixed by the DDA, failing which the agency would automatically possess the flats.
This proposal was presented before Union Cabinet Secretary K.M. Chandrasekhar on Tuesday. It is also one of the first bailout deals to a private developer in the city.
The DDA is forming a committee to valuate the cost of each flat before deciding on the loan amount. “The committee has been asked to submit its report within a fortnight so that there is no further delay in completion of the Games village,” said a government official.
The official added, “Finer details like time frame and interest rate to be charged will be worked out between the two parties once the committee submits its report.”
The government has helped Emaar-MGF by rescheduling the repayment of Rs 50 crore loan, which the developer took from SBI, by nine months.
The Games village is a public private partnership project between DDA and Emaar-MGF. As part of it, the developer was entrusted the job of not only developing the Games village but also sell two-thirds (768) of the total 1,168 apartments at market rates.
The developer has fixed the price of high-end apartments at over Rs 2 crore per flat. Only a fraction of the flats — about 389 — was given to the DDA. The agency would sell its share of flats after the Games at pre-determined rates.