I Squared Capital-backed toll roads owner and operator, Cube Highways, is in advanced discussions with Ramky Infrastructure to purchase the latter’s entire stake in its Narketpally Addanki Medarametala Expressway, also called NAM Expressway. A senior Telengana government official told FE that the state government has given its approval for the transfer of ownership to Cube Highways.

The project was constructed at a cost of Rs 1,760 crore and was funded by a term loan of Rs 1,060 crore, sponsor equity of Rs 230 crore and a government grant of Rs 470 crore, according to a report by India Ratings, the Indian arm of Fitch Ratings. Awarded in May 2010 by the Andhra Pradesh Road Development Corporation under the build-operate-transfer (BOT) mode, the NAM Expressway toll project carries a concession period of 24 years. After the division of Andhra Pradesh in 2014, the project came under the scope of the then newly formed state of Telengana.

The project was developed as a joint venture between Ramky Infrastructure and IL&FS Road Transportation Networks Limited (ITNL), the roads development arm of infrastructure finance major IL&FS Group. On Friday, ITNL, in a note to the stock exchange, said, it has transferred its 50% stake in the project to Ramky Infrastructure in a swap deal which also saw the transfer of Ramky’s 50% stake in Jorabat Shillong Expressway (JSEL) to ITNL.

An investment banker, who declined to be named, said the swap makes it easier also for ITNL to sell off its JSEL project, which is an annuity project. ITNL, which had a consolidated debt of `36,000 crore at the end of May 2018, is exploring the sale of some of its road assets. In an analyst call this month, the company’s management said it is in advanced stages of bundling three of its road assets for sale to one single investor.

In the past one-and-a-half months, rating companies CARE and Icra have downgraded ITNL’s debt papers/credit facilities citing weak financials. The board of ITNL, in late July, approved a rights issue to raise Rs 3,000 crore after its parent company authorised a Rs 8,000 crore recapitalisation plan to help the company improve its debt profile.