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Brookfield, a global asset management company, has extended its share purchase agreement to buy the IL&FS headquarters in Mumbai until June 2023, after the initial deadline of December 2022 lapsed. The extension was granted due to delays in closing the deal caused by litigation. The deal is worth ?1,080 crore and involves the acquisition of the 12,651.95 square meter land at plot No C-22 in the Bandra Kurla Complex, Mumbai, together with the IL&FS Financial Centre.
Project Holdings Seven (DIFC), an affiliate of Brookfield, had signed the agreement in December 2021. The resolution was put to vote and approved by 73.57% of the committee of creditors in January 2022. However, mortgage lending major HDFC asked the court to restrain IL&FS from selling the property in September 2022, citing a ?400-crore loan by HDFC to IL&FS through a lease rental discounting transaction.
The loan was to be paid back from cash flows generated by IL&FS, which assigned its cash flows to HDFC. However, the company's new management decided to sell the property as part of a plan to reduce its debt. On September 23, 2022, the adjudicating authority approved the sale, but HDFC challenged the decision, alleging that it violated principles of natural justice.
Earlier this month, the National Company Law Appellate Tribunal (NCLAT) rejected HDFC's request to halt the sale, stating that the sale was in accordance with the revised resolution framework authorized by the appellate tribunal in March 2020 and could not be a hindrance to approving the proposal. According to sources, HDFC is likely to file a petition in the Supreme Court of India against the deal.
The delays in closing the deal for Brookfield and the legal challenges have created an opportunity for lenders to get a revised offer for the asset. There has been an appreciation in the real estate sector in the last few quarters, and lenders may be able to negotiate a better price for the asset.
The Bandra Kurla Complex is a prominent business district in Mumbai and is home to several multinational companies, banks, and financial institutions. The IL&FS Financial Centre is a landmark building in the area and is considered one of the most prestigious addresses in Mumbai. The sale of the property will have a significant impact on the real estate market in Mumbai and is closely watched by industry experts.
Brookfield has been actively investing in India's real estate market and has a significant presence in the country. The company has invested in several high-profile projects and has a reputation for delivering quality projects on time. The acquisition of the IL&FS headquarters is part of Brookfield's strategy to expand its portfolio in India and increase its presence in the country's real estate market.
In conclusion, the extension of the share purchase agreement has provided a glimmer of hope to the deal, which has faced significant legal challenges. Both parties are hoping to close the deal soon, and the acquisition of the IL&FS headquarters will have a significant impact on India's real estate market. The delays in closing the deal have created an opportunity for lenders to negotiate a better price for the asset, and the outcome of the legal challenges will determine the fate of the deal.
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