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Silver Point, partner Acre declared highest bidder for IVRCL Chengapalli Tollways loans

The partners offered Rs 624 crore for loans of Rs 804 crore. In addition, the successful bidder must pay Rs 315 crore in deferred premium to the National Highways Authority of India

September 30, 2021 / 12:35 PM IST
IVRCL Chengapalli Tollways is a special purpose vehicle of IVRCL, which has been in liquidation since July 2019. (Representative Image: IANS)

IVRCL Chengapalli Tollways is a special purpose vehicle of IVRCL, which has been in liquidation since July 2019. (Representative Image: IANS)

Silver Point Capital, a United States hedge fund, in partnership with Assets Care & Reconstruction Enterprise (Acre), was declared the highest bidder for IVRCL Chengapalli Tollways’ outstanding bank loans.

The partners offered Rs 624 crore for loans of Rs 804 crore at an auction on September 28, said two people familiar with the development. Their offer works out to 78 paise on the rupee.

Omkara Asset Reconstruction Company withdrew from bidding for the asset after submitting its last offer of Rs 607 crore, the people said.

Lenders led by IDBI Bank had set a reserve price of Rs 500 crore for the outstanding loans of Rs 804.52 crore, according to the tender on the bank’s website.

They received expressions of interest from Kotak Mahindra Bank-backed Phoenix ARC, Ares SSG-backed ACRE, Aditya Birla Asset Reconstruction Company, Edelweiss ARC, Asset Reconstruction Company of India and Omkara within the September 9 deadline, one person said.

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In addition to paying the lenders, the successful bidder must pay Rs 315 crore in deferred premium to the National Highways Authority of India (NHAI) as part of the concession agreement, the person said.

“The overwhelming response for the road asset is mainly because construction of the road is almost completed and it is earning good revenue through toll collections,” said a bank official who did not want to be identified.

Also, the introduction of FASTag, the electronic toll-collection system operated by NHAI, has stemmed the loss of revenue and this has encouraged funds to bid, the bank official said.

Silver Point Capital and Acre did not respond to requests for comments.

Besides IDBI Bank, the lenders to the distressed project are State Bank of India (SBI), Union Bank of India, Bank of Baroda (BoB) and Karur Vysya Bank. The recoveries will reflect in their earnings in the quarter ending December 2021, the first person said.

Upon completing 92.5 percent of the toll road in September 2015, the operator was allowed by NHAI to charge a toll. From October 2015 to June 2021, the company raised Rs 522 crore from toll collections, a little over 40 percent of the project cost, the person said.

IVRCL Chengapalli Tollways is a special purpose vehicle of IVRCL, which has been in liquidation since July 2019. IVRCL, an engineering procurement and construction company, was in the second list of 28 companies that the Reserve Bank of India (RBI) had directed banks to refer to bankruptcy court.

IVRCL Chengapalli Tollways was awarded the contract in September 2010 to widen a section on National Highway 47 connecting Chengapalli via Coimbatore to Walayar in the border area between Tamil Nadu and Kerala.

The original cost of the 54.83 km project was estimated at Rs 1,123 crore, which increased to Rs 1,235 crore after cost overruns.

The initial concession period ends on September 30, 2037. There is a proposal to extend the concession period by two years to 2039, pending approval from NHAI, according to people aware of the matter.
Sangita Mehta

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