HCC Group Closes Sale Of Farakka-Raiganj Highways To Cube Highways

Infrastructure firm HCC Group on Tuesday said it has completed sale of Farakka-Raiganj Highways Ltd to Cube Highways and Infrastructure II Pte, at an enterprise value of Rs 1,508 crore.

HCC's infrastructure development arm HCC Concessions has completed the sale in its road project to Cube Highways, a platform controlled by I Squared Capital, Abu Dhabi Investment Authority and IFC, at an enterprise value of Rs 1,508 crore.

The enterprise value comprises a debt of Rs 905 crore and an equity valuation of Rs 603 crore, the company said in a statement.

"The total expected payout of Rs 603 crore to HCC Group includes a cash payout of Rs 270 crore, which combines equity consideration and contractor payments, and Rs 233 crore of hold backs to be released on the completion of dispute resolution with NHAI," it said.

Besides, it also includes Rs 100 crore of earnout payable in 2023 contingent on traffic projections.

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, and the details of which will be specified on completion of the ongoing conciliations with the National Highways Authority of India.

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 payout.

"A successful closure with NHAI in the coming months of its tolling right confirmation would entitle HCC Group to additional consideration estimated at Rs 200 crore," the company said.

HCC Group Chief Executive Officer Arjun Dhawan, said, "We are pleased to conclude a transaction of this size and complexity, despite the hurdles presented by Covid-19."

He added that the company had faced every type of challenge in developing the project, from lengthy land acquisition delays to meeting the expectations of numerous stakeholders while executing in major towns such as Farakka, Kaliachawk, Malda, and Gajol.

"With the support of NHAI and our lenders, without whom this project would not have been possible, FRHL became the most valuable asset in our concessions portfolio. This sale to Cube unlocks substantial sums which may be reinvested back in our EPC business," Dhawan said.

FRHL, which forms part of the main arterial highway in West Bengal, is among the largest public-private partnership projects in India.

"HCC Concessions and FRHL have been in active discussions with NHAI to conciliate all claims and disputes totalling about Rs 3,000 crore, which are expected to conclude in Q3 FY21," the company said.

FRHL will pass on receipts from NHAI against all claims (mainly for land acquisition delays) to HCC Group on receipt of these monies.

"The completion of conciliation process will not only release capital to the group from the NHAI but also the amounts conservatively held back by Cube," it said.

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, respectively.