Debt-laden IL&FS announces completion of 49% stake sale in China road asset

Debt-laden Infrastructure Leasing and Financial Services (IL&FS) on Thursday announced completion of 49 per cent stake sale in its Chinese road asset - Chongqing Yuhe Expressway Co Ltd (CYEC).

The stake is sold to China Merchants & PingAn Infrastructure Phase 1 Equity Investment Fund (Tianjin) Co Ltd (PingAn), a fund jointly owned by PingAn Insurance and China Merchants, a release from IL&FS Group said.

The transaction will help the group address Rs 2,600 crore of its overall debt of close to Rs 99,000 crore (as of October 2018).

The group, through its step-down Singapore-based subsidiary, ITNL International Pte Ltd (IIPL), was holding 49 per cent stake in CYEC. The balance 51 per cent stake in CYEC is held by Chongqing Expressway Group (CEG).

IL&FS has duly received Rs 1,035 crore (USD 141.3 million) in Singapore as part of this stake sale transaction, the group said in the release.

The amount will be used to pay around USD 88 million of Bank of Baroda loans and the balance to meet IIPL liabilities - including bondholders under ITNL Offshore PTE Ltd (IOPL), it said.

The group said PingAn had bid at an aggregate equity valuation of USD 281 million for 100 per cent stake.

This values IIPL's 49 per cent stake at around USD 140 million and PIngAn has agreed to take over the Rs 1,600 crore debt in CYEC (as of December 2018), it said.

The transaction was completed post receipt of approval from (Retd) Supreme Court Justice DK Jain, who is overseeing the resolution process of the group, and National Company Law Tribunal (NCLT).

CYEC holds and operates a concession for a toll based expressway of approximately 58.72 km in China Mainland till 2032.

The company has the right to collect toll from users and concessions from Chinese Government for the remaining period of concession term.