ICICI warns of dealing with Essar properties

MUMBAI, OCT 11: Term lending institution ICICI has warned public from striking any deal with the Ruia-owned Essar House Pvt Ltd which is ...

MUMBAI, OCT 11: Term lending institution ICICI has warned public from striking any deal with the Ruia-owned Essar House Pvt Ltd which is trying to lease off seven floors of Essar headquarters situated in Mahalaxmi, Mumbai, to corporate/high net worth clients. The Essar group, whose flagship Essar Steel, recently defaulted in redeeming 250 million of floating rate notes FRNs are in desperate need to raise funds to tide over the fund crunch.

EHPL and Arkay Holdings are private companies of the promoters and own the Rs 500-crore at today8217;s market value glass-structured Essar House and few bungalows in Worli. Though properties were already mortgaged to ICICI, the company recently made presentations to real estate agents, HDFC, foreign banks and other corporates offering them part of its building for a possible lease or, if cleared by the FIs, a sell-off.

In newspaper insertions, ICICI said any company which is dealing with EHPL on the said properties are doing so quot;at their own risk and perilquot;. quot;As theproperties are mortgaged in favour of ICICI, the company and their directors are not entitled to sell, assign, alienate, encumber, charge, lease or dispose off the properties without prior written approval/consent of ICICI. The public is hereby warned not to enter into any transaction of any nature with the said companies,quot; solicitors of ICICI said.

Sources in ICICI said the financial institution was peeved at the way the company went ahead with the presentations without taking them into confidence. quot;If they have told us in advance, this problem would not have occurred,quot; said a company official.

Essar officials, when contacted, said no lease deals had been finalised as yet and as when any client for the property is negotiated, ICICI would be informed. They clarified that part of the building would be offered only as business centre and not on rental basis.

The original plan was to offer about seven floors of Essar House to MNCs, foreign banks and blue-chip Indian corporates. The deal was to generateabout Rs 10 crore of annual rentals for the company excluding deposit. Essar Properties planned to charge a premium rent of around Rs 340-350 per square feet for the full-service office accommodation which includes security, furnitures, telephone and fax connections.

At present, various group companies like Essar Steel, Essar Oil and Essar Shipping situated in Essar House pay rentals to EHPL.