Go First's lenders set reserve price at Rs 1,960 crore for Thane property auction

21 May 2024 , 10:25 AM

According to news reports, the creditors of Go First have set a reserve price of about ₹1,960 Crore for the property of the company in Thane. A formal auction procedure that includes newspaper advertisements is probably going to begin as early as this week.

The latest move by creditors comes as the Delhi High Court’s decision to permit lessors to deregister and seize ownership of 54 Go First aircraft has diminished expectations of receiving a fair price for the airline, making any chance of a turnaround increasingly unlikely.

The land tract might be worth approximately ₹1,200 Crore on its own, based on lender appraisals. It is located in a desirable region of Thane. However, given the potential for future expansion and cash flows, the value might increase to at least ₹2,500 Crore.

The Wadia group retained the land as security for debts obtained by Go First. The real estate arm of the firm owns the property. Lenders want to make sure that plans they are now reviewing for the airline do not conflict with recovery from this land.

It is probable that the land will be offered by the lenders on an as-is, where-is basis, meaning that the winning bidder will be responsible for paying any future taxes, government fees, and other liabilities associated with the land. Four of the 94 acres have been taken up by the Thane Municipal Corporation for the purpose of beautifying and widening the roads; these acres must be taken into account.

Despite the fact that there is virtually little in the airline to sell as a going business and that the Delhi High Court’s judgement permitting lessors to deregister and seize possession of the planes implies that lenders are attempting to extract value from the land.

Go First has around ₹6,200 Crore in debt to creditors. The recognised claims of the secured creditors are ₹1,934 Crore, ₹1,744 Crore, and ₹75 Crore for the Central Bank of India, Bank of Baroda, and IDBI Bank, respectively.

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