Cube Highways is in talks with Hindustan Construction Company (HCC) to acquire full ownership of Baharampore Farakka Highways (BFHL) from the latter, FE has learnt.
Cube Highways is in talks with Hindustan Construction Company (HCC) to acquire full ownership of Baharampore Farakka Highways (BFHL) from the latter, FE has learnt. According to sources, Cube Highways will acquire a 100% stake in HCC’s under-construction project, BFHL, with discussions still going on with regard to valuations. The deal between HCC and Cube will be signed only after the construction is completed since Cube’s mandate is to invest in projects that have some operational history or established historic cash flow profiles. Sources said the construction of BHFL is nearing completion and it should be ready by March 2019.
Both HCC and Cube did not respond to queries for comments on the development. Cube Highways is a roads platform formed jointly by global infrastructure investment manager I Squared Capital, and the World Bank’s International Finance Corporation (IFC). Abu Dhabi Investment Authority (ADIA) also has a minority stake in Cube, a platform that operates more than 1,300 lane-km of highways in India. This will be the second project that Cube is acquiring from HCC. In September, HCC, in an exchange filing, said, it signed a definitive agreement with Cube to sell its 100% stake in Farakka-Raiganj Highways (FRHL) for an equity consideration of Rs 372 crore.
According to the concession agreement for BHFL, the project’s construction cost is pegged at Rs 998.79 crore, of which Rs 390 crore was given as a grant from the National Highways Authority of India (NHAI). Construction of the project, which carries a concession period of 25 years, has been delayed because of difficulties in land acquisition. However, in its annual report, HCC said it has received an arbitration award of Rs 450 crore from NHAI on account of the delay.
HCC started collecting toll from May 2014 on receipt of a provisional certificate of commencement. BFHL had a toll collection of Rs 160 crore for the year ended March 31, 2018. Its losses narrowed to Rs 3.4 crore in FY18 from Rs 21 crore a year earlier. However, total liabilities stood at `869 crore while net worth was Rs 134 crore, according to information in the annual report.
HCC had won the bid to construct the 103-km project on a design, build, finance, operate and transfer (DBFOT) model between Baharampore and Farakka in West Bengal in June 2010.