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Gammon Infrastructure Projects subsidiary terminates concession agreement for project in Andhra Pradesh

Capital Market 

Seeks termination payments aggregating to Rs 1123.37 crore from APRDC

announced that (RGBL), a of the Company has, on 9 July 2018, served a notice of termination of the Concession Agreement in respect of its project for design, construction, finance, operation and maintenance of a 4.15 kms long four-lane major bridge across along with 10.34 kms of total approach roads on either side of the bridge, which connects Kovvur and Rajahmundry in the State of on BOT basis (the 'Project') on account of several breaches of the said Concession Agreement by Road Development Corporation ('APRDC'). The Termination Notice was served by RGBL due to failure on the part of APRDC to cure / redress breaches of the Concession Agreement notified by RGBL vide its cure period Notice dated 26 February 2018 pursuant to the Concession Agreement. The Project is operational since November, 2015 and has contributed Rs.57.89 crore to the consolidated revenue of the Company for financial year 2017-18.

The said Concession Agreement contemplated necessary safeguards and protections to the Lenders by way of Termination Payments which formed one of the basic foundations for Lenders to advance loans for the Project. Consequent to serving of the Termination Notice and based on the company's computation in accordance with clause 37.3.2 of the said Concession Agreement, the Termination Payments aggregating to Rs.1123.37 crore has become due and payable by APRDC within 15 days of the Termination Notice.

Further, Union Bank of India, one of the Lenders for the Project has, on 9 July, 2018 initiated and served Corporate Insolvency Resolution Process against RGBL before the Hon'ble National Company Law Tribunal, Mumbai Bench ('NCLT'). RGBL has represented to Union Bank of to reconsider moving the proceedings before NCLT and explore better options in the interest of the Project, Lenders and all Stakeholders.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, July 11 2018. 09:15 IST
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