HCC closes sale of Farakka Raiganj Highways to Cube Highways for Rs 1,508 crore
Sep 22, 2020
Mumbai (Maharashtra) [India], September 22 : HCC Concessions Ltd, the infrastructure development arm of HCC Group, has completed its 100 per cent sale of Farakka-Raiganj Highways Ltd (FRHL) to Cube Highways and Infrastructure II Pte Ltd.
FRHL, which forms part of the main arterial highway in West Bengal, is among the largest public-private partnership projects in India with an enterprise valuation of Rs 1,508 crore.
The amount comprises debt of Rs 905 crore and an equity valuation of Rs 603 crore. Cube Highways is a platform controlled by I Squared Capital, Abu Dhabi Investment Authority and IFC.
The total expected payout of Rs 603 crore to HCC Group includes cash pay-out of Rs 270 crore which combines equity consideration and contractor payments, Rs 233 crore of holdbacks to be released on the completion of dispute resolution with National Highways Authority of India (NHAI) and up to Rs 100 crore of earnout is payable in 2023 contingent on traffic projections.
The traffic in FRHL has already returned to pre-Covid levels.
Additionally, as part of the agreement with Cube, HCC Group will be entitled to a revenue share from FRHL over the entire concession period which could be material in nature. The details will be specified on the completion of the ongoing conciliations with NHAI.
The enterprise value of Rs 1,508 crore also excludes a structure section of the project which was descoped by NHAI and for which Cube has offered a contingent pay-out.
A successful closure with NHAI in the coming months of its tolling right confirmation will entitle HCC Group to additional consideration estimated at Rs 200 crore.
"This sale to Cube unlocks substantial sums which may be reinvested back in our engineering, procurement and construction business," said HCC Group Chief Executive Officer Arjun Dhawan.
The consortium of lenders to FRHL is led by Yes Bank and comprises Indian Bank, ARCIL, IIFCL, Bank of Baroda, Punjab National Bank and Union Bank of India.
The legal and financial advisors for this transaction were Cyril Amarchand Mangaldas and Edelweiss
Financial Services Ltd respectively.
