Bhushan Steel-Essel plans for Bollywood theme park grounded by funds crunch
Future City Properties, a special purpose vehicle (SPV) formed by Bhushan Steel and Essel that had bought a 250-acre plot of land from CIDCO in 2010, has shelved its plans due to inability to raise funds, two people close to the development said.india Updated: May 24, 2011 21:28 IST
Future City Properties, a special purpose vehicle (SPV) formed by Bhushan Steel and Essel that had bought a 250-acre plot of land from CIDCO in 2010, has shelved its plans due to inability to raise funds, two people close to the development said.
Problems have been brewing between the two companies over liquidity issues, an official with one of the companies said.
“The consortium was suppose to pay Rs 1,530 crore to CIDCO in more than one tranche and they were unable to make the payment,” said a banking source close to the development. “The project is not happening as the consortium is also finding it difficult to raise funds.”
An official with Essel told HT, “We do not have anything to do with the land deal.” An email questionnaire sent to Essel group did not elicit any response. The official indicated that all is not well between the two companies. However, this could not be independently confirmed.
Nitin Johri, CFO, Bhushan Steel pleaded ignorance about the status of the deal. “I do not know the status of the Kharghar deal,” he said. An email query sent to Bhushan Steel on Monday remains unanswered.
Meanwhile a senior CIDCO official confirmed the development but refused to divulge the reason for the cancellation of the deal.
The 250-acre land parcel was put on the block in 2009 and Future City Properties emerged the winner with a bid of Rs 1,530 crore. The payment was to be made within a month.
CIDCO was to get a 26% stake in the project. The SPV retained the right to put up a residential or commercial complex in 100 acres of the land. The Bollywood theme park was to occupy the remaining 150 acres.
“Both the companies had attempted to raise funds for the project but it seems it is tough in the present situation especially for a real estate project of such magnitude,” said the banking source. The Bollywood Park was estimated to cost upwards of R7,000 crore, some of which could have been offset by selling residential apartments.
There are indications that the state government may invite fresh bids for the project. Indiabulls, which was the second highest bidder, is learnt to have sought custody of the land. No decision has been taken on this.
In case fresh bids are invited, the new bidders need not necessarily plan a Bollywood theme park on the land.