In a major step towards resolving its overall debt, IL&FS on Thursday announced completion of its 49 per cent stake sale in Chinese road asset, Chongqing Yuhe Expressway Co Ltd (CYEC), which would help the company to address debt of about Rs 2,600 crore.
It sold the stake to China Merchants & PingAn Infrastructure Phase 1 Equity Investment Fund (Tianjin) Co Ltd (PingAn), a fund jointly owned by PingAn Insurance and China Merchants.
This is the largest transaction for IL&FS since the sale of its wind energy assets to Orix, IL&FS said in a statement.
IL&FS has duly received Rs 1,035 crore ($141.3 million) in Singapore as part of this transaction.
The consideration will be used to pay around $88 million of Bank of Baroda loans and the balance to meet IIPL liabilities, including the bondholders under IOPL.
IL&FS Group held 49 per cent stake in CYEC through its step down Singapore-based subsidiary, ITNL International Pte Ltd (IIPL).
The balance 51 per cent stake in CYEC is held by Chongqing Expressway Group (CEG).
PingAn had bid at an aggregate equity valuation of $281 million for 100 per cent stake. This valued IIPL’s 49 per cent stake at around $140 million and PingAn had agreed to take over the Rs 1,600 crore debt (as of December 2018) in the CYEC.
The transaction was completed post receipt of approval from retired Supreme Court Justice D.K. Jain and the National Company Law Tribunal (NCLT).
ITNL Offshore PTE Ltd (IOPL) and ITNL International Pte Ltd (IIPL) are two Singapore-based subsidiaries of IL&FS Transportation Networks Ltd (ITNL), a majority-owned subsidiary of IL&FS.
CYEC holds and operates a concession for a toll based expressway of 58.72 km in mailand China till 2032. The company has the right to collect toll from users and concessions from the Chinese government for the remaining period of concession term.
The management and the new board of IL&FS, as part of its quarterly update on the progress of ongoing group resolution process in January 2021, had said it has addressed around Rs 32,000 crore of aggregate debt of the group.
The group maintains its estimates of addressing aggregate debt of over Rs 56,000 crore by FY22, out of an overall debt of over Rs 99,000 crore (as of October 2018).