Reliance Infrastructure, part of the debt-laden Anil Ambani group, has received in-principle approval from the National Highways Authority of India (NHAI) for a “harmonious substitution" of its Delhi-Agra toll road to Singapore-based Cube Highways and Infrastructure for ₹3600 crore.
Reliance Infra, which will receive equity payment of ₹1700 crore from this transaction, said it would use 100% of the sale proceeds to pay off the company’s debt.
By “harmonious substitution", the control of the asset moves to the new owner who will also take on responsibility for servicing the asset’s ongoing debt.
Reliance Infrastructure, in an exchange filing on Friday, said its total debt was at over ₹6,000 crore at the end of December 2019. The filing showed that the total amount outstanding was ₹4,597.06 crore, of which the amount of default as on December 31, 2019, was ₹1,048.70 crore. The total financial indebtedness of the listed entity, including short-term and long-term debt, was ₹6,073.66 crore, the filing said.
The Delhi-Agra toll road is a 180-km six-lane highway. Reliance Infrastructure will receive enterprise value of ₹3,600 crore for the road, including equity of up to Rs. 1,700 crore. The asset-level debt of ₹1,900 will become current and move to Cube Highways, once the transaction goes through.
Cube Highways and Infrastructure III Pte Ltd. (CUBE III), which is taking over the asset, is owned by Singapore-based Global Infrastructure Fund, I Squared Capital, and a wholly-owned subsidiary of the Abu Dhabi Investment Authority.
The transaction awaits approval from its lenders. The company said in a press release that the sale is in line with the commitment made by Reliance Infrastructure to its 16-lenders on 6 July, 2019 when the lenders signed an Inter Creditor Agreement for resolution of debt and granted moratorium to company on the interest and principal payments.
Regarding the NHAI approval, a Reliance Infrastructure spokesperson said, “The sale of the Delhi-Agra toll road is the first of many liquidity events to move the company towards becoming debt-free in 2020. We are grateful to all our creditors and various stake holders for having reposed their faith in the business and the management team. Cube III has the financial muscle and proven capability to successfully operate DA toll road for the entire course of the concession period until 2038."