Debt-laden Infrastructure Leasing & Financial Services (IL&FS) on Thursday announced completion of a 49 per cent stake sale in its Chinese road asset, Chongqing Yuhe Expressway Co. (CYEC).
The stake is sold to China Merchants & PingAn Infrastructure Phase 1 Equity Investment Fund (Tianjin) Co. (PingAn), a fund jointly owned by PingAn Insurance and China Merchants, stated the release from IL&FS Group.
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). It further maintains its estimates of addressing aggregate debt of over Rs 56,000 crore by 2021-22.
The management and 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 had addressed Rs 32,000 crore of aggregate debt of the group.
The company claimed it was the largest transaction for IL&FS since the sale of its wind energy assets to ORIX Corporation. The consideration will be used to pay $88 million of Bank of Baroda loans; the balance to meet ITNL International (IIPL) liabilities, including bondholders under ITNL Offshore (IOPL), an official statement said.
The group, through its step-down Singapore-based subsidiary, IIPL, was holding 49 per cent stake in CYEC. 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 $140 million and PingAn had agreed to take over the Rs 1,600-crore debt in CYEC (as of December 2018).
The transaction was completed after receipt of approval from retired Supreme Court Justice D K Jain — overseeing the resolution process of the group — and the National Company Law Tribunal.
IOPL and IIPL are two Singapore-based subsidiaries of IL&FS Transportation Networks (ITNL), a majority owned subsidiary of IL&FS.
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 the Chinese government for the remaining period of the concession term.