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In a bid to pay off its debt, Infrastructure Leasing & Financial Services Ltd (IL&FS) has started the process to sell a 49 per cent stake in a Chinese road asset company.
IL&FS subsidiary ITNL International Pte Ltd holds the equity stake in Chongqing Yuhe Expressway Company Limited, a company incorporated in China.
The Chinese company currently holds a concession for a toll-based expressway of approximately 58.72 km, over which it has the right to collect tolls from users. Approximately 13.25 years of the term of the current concession remain as of March 31 and Chongqing Yuhe Expressway Company Limited has the right to collect tolls from users, and subsidies from the Chinese government, for the remainder of the concession.
This development comes three weeks after the beleaguered infrastructure financing company set up an operating committee to kickstart and monitor the asset monetisation process.
ITNL had picked up the 49 per cent stake for $160 million in Chongqing Yuhe Expressway Company, one of China’s largest state-owned enterprises, with $25 billion in assets. The board has engaged UBS AG in Hong Kong to assist in the transaction and consummation of the transaction will be subject to requisite approvals.
According to industry watchers, the stake sale could fetch around ₹700 crore for ITNL, which is in the process of selling IL&FS group’s equity stakes in around two dozen road assets. Also, by selling its stake, IL&FS has a contractual obligation to pay its dim sum bondholders. A dim sum bond is a bond that is denominated in Chinese renminbi and issued in Hong Kong.
In total, IL&FS, which defaulted on its payments last year, owes in excess of ₹1 lakh crore. So far, around ₹1,000 crore have been recovered.
In addition, IL&FS is selling its 874 MW operational wind energy portfolio to GAIL India for ₹4,800 crore, in a sale expected to close in June.
Overseas projects
On the infrastructure side, IL&FS has exposure to projects outside India. In March 2008, ITNL had acquired Spain’s Elsamex, a road maintenance, operation and management company, which has a presence in South America, for €50 million.
In a related development, the IL&FS board also announced the appointment of Dilip Bhatia as CEO of ITNL.
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