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IL&FS Transport may dump InvIT plan

Ksenia Kondratieva Mumbai | Updated on January 11, 2018

InvIT may help cut debt of ₹4,000 cr, but co is eyeing cheaper avenues

IL&FS Transportation Networks Ltd (ITNL), one of the largest private sector BOT (build-operate-transfer) road operators in India may cancel its plans to raise fresh funds through investment infrastructure trust (InvIT). The company has been able to refinance debt of several of its projects at a cheaper rate, sources with knowledge of the matter told BusinessLine.

The company is expected to take a final decision on whether to raise funds through InvIT or not by the end of the second quarter.

ITNL refused to comment citing the upcoming board meeting that will be conducted on May 27. “Given our imminent board and audit meetings, which have been announced to the exchanges, we are not in a position to convey matters particularly which are price sensitive in nature,” Karunakaran Ramchand, Managing Director and Executive Director, IL&FS Transportation Networks, told BusinessLine.

ITNL had earlier announced (in Q3 FY17 earnings conference call) that InvIT route could help company reduce debt by around ₹4,000 crore on a consolidated basis. ITNL consolidated debt stood at ₹26,500 crore at the end of Q3 FY17. The company projected the debt at around ₹27,000 crore on a consolidated basis for FY18.

The company had recently refinanced debt of two of four SPVs planned to be listed under the InvIT. As per the company’s BSE filings, in May, Jharkhand Road Projects Implementation Company Ltd (JRPICL), a subsidiary of ITNL, has refinanced its debt of ₹1,730 crore by issue of NCDs at a weighted average coupon of 9.45 per cent a year reducing the interest cost by around 205 basis points.

Earlier in February another subsidiary of ITNL — Hazaribagh Ranchi Expressway Ltd (HREL) refinanced its ₹715 crore debt by issue of NCDs at a weighted average coupon of 8.56 per cent payable semi-annually getting interest saving of around 282 basis points. Another two SPVs proposed under IL&FS Transportation InvIT are North Karnataka Expressways Ltd (NKEL) and Sikar Bikaner Highways Ltd (SBHL).

According to the original plan, subscription to IL&FS Transportation InvIT units is planned to be raised through private placement while proceeds from subscription would be used to prepay a portion of existing bank loans and promoter subordinated debt.

Analysts’ views

Going through InvIT route could help company deleverage its operational road projects by more than 40 per cent, analysts say.

India Ratings and Research’s (Ind-Ra) in its report on May 9 noted that post issuance, two SPVs (HREL and SBHL) shall become zero-external debt companies, while JRPICL and NKEL will have an external debt of ₹1,250 crore and ₹199 crore, respectively.

ICRA, too, expects the consolidated external debt across the four SPVs standing at around ₹2,600 crore (as on December 31, 2016) to reduce to ₹1,400 crore post InvIT formation. Analysts add that channelling the assets to InvIT, apart from refinancing debt, could help ITNL raise fresh funds for funding stalled projects.

Published on May 16, 2017

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