Lenders approve IL&FS' debt recast proposal for Chenani Nashri Tunnelway

The lenders have approved IL&FS Group's proposal to restructure the Rs 5,500 crore debt of its subsidiary Chenani Nashri Tunnelway (CNTL), which offers almost full repayment to them.

The move comes after the company has revalued itself at Rs 5,257 crore now after the deal with Cube Highways of Singapore failed last year, due to regulatory delays, for a consideration of Rs 3,900 crore.

The three-day voting opened on March 21 and saw the lenders favouring debt recast as it offers them 99 per cent of their money while unsecured lenders will get back 90 per cent. The new proposal values the company at Rs 5,257 crore and will address Rs 4,910 crore of the IL&FS Group debt.

An IL&FS spokesperson confirmed the development, saying we have got the requisite approvals from the lenders to restructure the debt of CNTL.

The proposal entails CNTL converting itself into a green entity, with secured and unsecured lenders getting over 99 per cent and 90 per cent of the principal amount, respectively, upon implementation of the new proposal, a company official in the know of the development told PTI.

CNTL is a wholly-owned subsidiary of ITNL (an IL&FS company) that jointly with its nominees holds 100 per cent equity. It has been classified as an amber company, which will now undergo a change in status.

The lenders will receive an upfront payment of around Rs 1,700 crore of the principal (they have already debited Rs 670 from the escrow account), in addition to interest accrual from April 2021, providing a benefit of around Rs 370 crore on implementation.

CNTL continues to maintain and operate the longest tunnel in J&K and is receiving an annuity of Rs 635 crore annually, which are being received on time.

CNTL lenders, in their last meeting, had unanimously approved Crisil and Icra as rating agencies, SVKM as the forensic auditor and considered RBSA's valuation report as the next step to complete the process, which also involves appointing one more valuer as the present value determined by the company-appointed valuer.

The consortium of CNTL lenders includes the State Bank of India, Jammu & Kashmir Bank, Punjab & Sind Bank, Canara Bank, Punjab National Bank, Uco Bank and Edelweiss ARC, among others.

The recovery in the restructured debt proposal is far higher for all lenders compared to the divestment proposal wherein Cube Highways had emerged as the highest bidder offering Rs 3,900 crore.

CNTL, which owes a little over Rs 5,500 crore to the lenders, had entered into a share sale agreement with the Singaporean infra major Cube Highways & Infrastructure in August 2020 for Rs 3,900 crore, but the same got lapsed in August 2021 following which the management appointed an external valuer who pegged a much higher valuation of Rs 5,257 crore.

The Chenani-Nashri Tunnel project is part of the ambitious 286-km-long four-laning of the Jammu-Srinagar national highway to create all-weather connectivity. The project will reduce the distance between Jammu and Srinagar by 31 km. It was launched at the cost of Rs 5,269 crore in March 2017 with a concession period up to March 2032.

As of October 2021, the ILFS Group had resolved Rs 52,200 crore of its Rs 99,000 crore of fund-based and non-fund based debt when it went belly up in October 2018 spread across 347 group companies, 172 of them offshore entities.