Debt crisis: IL&FS may opt for roads, renewable projects auction

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Mumbai | Published: November 23, 2018 5:21:48 AM

IL&FS’ roads development arm, IL&FS Transportation Networks (ITNL), has the largest portfolio of highways built via a public, public, private partnership (PPP), with 28 build, operate, transfer (BOT) projects.

According to sources, American private equity firm Lone Star Funds had approached the new board of IL&FS with an offer to buy three road projects.

Troubled infrastructure group IL&FS, which has prepared a roadmap to resolve its debt crisis, is believed to be now planning an auction to sell off its roads and renewable energy projects to generate funds.

According to sources, American private equity firm Lone Star Funds had approached the new board of IL&FS with an offer to buy three road projects, but were told to express their interest through the upcoming auction. Similarly, Cube Highways had also concluded the final stages of talks with the former IL&FS board to buy five road projects. According to the term sheets of which FE has a copy, Lone Star had offered $93 million, or Rs 604.5 crore (using a conversion of Rs 65 to the dollar) for Sikar Bikaner Highway (SBHL), $291 million, or Rs 1,891.5 crore, for Jharkhand Road Projects (JRPICL), and $380 million, or Rs 2,470 crore, for Moradabad Bareilly Expressway (MBEL), totalling $764 million, or Rs 4,966 crore.

Cube had offered a gross consideration of Rs 2,500 crore for five projects, namely, Pune Sholapur Road Development Company (PSRDCL), Road Infrastructure Development Company of Rajasthan (RIDCOR) – Phases I and II, Jorabat Shillong Expressway (JSEL), West Gujarat Expressway (WGEL) and Chenani Nashri Tunnelway (CNTL).

However, in a progress report submitted to the National Company Law Tribunal (NCLT) on October 31, the new board of IL&FS said while trying to take advantage of the levels of interest shown earlier in the purchase of assets by various parties, it is now faced with a challenge of adapting these onto a process that is formal, transparent and achieves speedy resolution.

According to sources, Arpwood Capital and JM Financial Consultants, the financial and transaction advisers to IL&FS, are preparing a list of assets that can be monetised. The advisers, appointed last month by the company’s new board, may present the list of projects to be sold, to the board, in the next few days. After the list is approved, the company will make an announcement and will call for expressions of interest, also known as request for qualifications (RFQ).

Sharad Goel, chief communications officer, IL&FS Group, declined to offer any comment on queries from FE on the matter.

Sources said that while this is not the usual way to sell infrastructure projects, inviting bids is a time-bound process, and it is essential that the process is completed in limited time, given the continuing multiple defaults on loans taken by the IL&FS Group.

Till date, IL&FS has reported defaults totalling Rs 4,648.19 crore.

IL&FS’ roads development arm, IL&FS Transportation Networks (ITNL), has the largest portfolio of highways built via a public, public, private partnership (PPP), with 28 build, operate, transfer (BOT) projects. Of these, five are under construction, five are to be terminated due to delays in construction and land acquisition, while three road concessions are coming to the end of their tolling period in the next two years. This leaves about 15 operational road projects that can be offered for sale.

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