notice to asset reconstruction … of...india infrastructure finance company limited notice to asset...

INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED

NOTICE TO ASSET RECONSTRUCTION COMPANY'S (ARC's)

Sale of Financial Assets - Invitation for offer

1. IIFCL intends to sell the financial assets, for 'cash' or 'cash-cum-SR', in

respect of the following NPA accounts on basis of 'without recourse' to IIFCL :-

(i) Concast Road SPVs.

a. Concast Ambha Road Projects Pvt. Ltd. b. Concast Dhaneta Road projects Pvt. Ltd. c. Concast Jawasa Road projects Pvt. Ltd.

d. Concast Morena road projects Pvt. Ltd.

(ii) Atlanta Infra Assets Ltd.

(iii) Mora Tollways Ltd.

2. Based on our assessment, we expect recovery in these accounts ranging from

short to medium term. However, we prefer to sell these financial assets in this

financial year from a balance sheet perspective.

3. Brief details of the above mentioned SPVs are attached in the Annexure.

You may express interest/give offer for purchase of all the above accounts or

individual accounts.

4. Please let us know your requirements in respect of due diligence,

examination of documents etc.

5. It may be noted here that IIFCL is inviting expression of interest/offer for

purchase from other ARCs also and IIFCL may undertake negotiation for

improvement in offer/terms, in its sole discretion. Kindly note that the proposed sale

is subject to final approval of Competent Authority of IIFCL.

INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED

6. Based on the feedback/interest/offer received, IIFCL may inform the co-

lenders in the respective project, to facilitate and explore the possibility of a joint sale

based on mutual comfort of the lenders and the ARC.

7. The expression of interest/offer for purchase may please be sent to us on or

before 15 th January, 2016

8. In case of any clarification/query, you may please contact us.

Contact details:

Shri. Sanjeev Ghai, Chief General Manager, Landline: 011-23450261/23450252 Mobile: +919990725901 Email: [email protected]

Shri. T. Hari Krishnan, Deputy General Manager, Landline: 011-23450213 Mobile: +919873123589 Email: [email protected]

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CONCAST ROAD PROJECTS PVT 1,TD,

Project Description Development and operation/maintenance of existing four major district roads under package —IX comprising of (i) Ambha-Pinhat Road (23.115 Km) (ii) Tekna — Manpur-Rameshwar Road (19.410 Km) ( (iii) Nadigaon — Secondha (23.27Km) (iv) Satanabada Narwar Road (25.540 Km) Madhya Pradesh by intermediate-Laning/Two-Laving on DBFOT on Annuity basis. Z158.79 Cr. Debt: Z111.15 Cr. Equity:47.64 Cr. (Whole equity is infused as per CA certificate)

TPC & means of Finance

Bank/Fls involved (Z in Crore)

Name of Bank/FI Amount Sane. Amount Disb. PNB (Lead) 50.00 44.84 United Bank of India

29.40 26.02

IIFCL 31.75 28.00 TOTAL 111.15 98.86

SCOD 29.12.2014. Securities Available i) A first charge and mortgage of all the borrower's

immovable properties. ii) Pledge over 51% of the equity 'shares of the

borrower. iii) A first charge on all the intangible assets of the

borrower, iv) Personal guarantee of Shri Sanjay Kumar Surekha

(Promoter) v) Corporate guarantee of Concast Infratech Limited.

Physical/Financial Progress

As per LIE: 50.00% As per IE : 30.00%

Status of the project a) MPRDC, in the month of Feb'2015 had terminated the Concession Agreement on account of slow progress, non-achievement of Milestones, default in payment of penalty. The lenders as well as developers, requested MPRDC and Appellate Authority to provide adequate chance and time to remedy the situation / identify substitute, which, however was not considered.

b) MPRDC proceeded to award the project on EPC mode to a different contractor.

c) The borrower invoked the process of arbitration under clause 44.3 of Concession Agreement. MPRDC has suggested to invoke clause no 44,4 of the Concession Agreement as Govt. of Madhya Pradesh has constituted a separate Arbitration Tribune to deal with such cases.

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d) The lenders have decided to conduct a "Special Audit" of the SPY to ascertain the end use of the funds infused.

i. Through process of Arbitration/Arbitration Tribunal. Possible avenues for ii. The Lenders have decided to initiate legal action by Recovery:- recall of loan, invocation of guarantee and filing

recovery suit before DRT. iii. After the initiation of legal action in DRT, lenders may

join, "without prejudice", the Arbitration process as in (i) above.

iv. Lenders may proceed against MPRDC in I-Iigh Court, to put stay on EPC work and to compensate the lenders to the extent of work done in the project.

v. The initiation of legal action/special audit is expected to put pressure on the Promoter to come up with a proposal for settlement of dues (It may be highlighted here that in Concast Jawasa project the Corporate guarantee of the flagship company of the group viz., Concast Steel & Power (CSP) is available. Thus action taken in the case by invoking the guarantee of CSP and also by possible filing for its winding up is expected to put elevated pressure on the Promoter to come up for an acceptable settlement). -

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CONCAST DITANETA ROAD PROJECTS PVT LTD.

Project Description Development and operation/ works of the 4 MDRs — Rakhi — Shahajpur Dindori road (53.42 Kms and Suraiya — Dhamni —Singot road Kms, in the state on (DBFOT) on Annuity Z130.56 Cr. Debt: 191.39 Cr. Equity:31.97 Cr. q2..1 Name of Bank/FI

maintenance under package-VI comprising

road (13.50 Km), Bichiya Km), Bailkhedu — Saroud

Simariya — Badhiyakheda (13.22 Kms) with

design, Build, finance, basis.

1 . 1 7 Cr is infused as_per Amount Sanc.

of the 2 Laning of Dhaneta

— Shammapur road (12.69

— Padariya a total Length 92.82

operate and transfer

CA certificateL_

—

—


Bank/FIs involved (Z in Crore)

Amount Disb. Bank of India (Lead)

33.00 28.33

Indian Bank 32.39 27.31 11FCL 26.00 21.92 TOTAL 91.39 77.56

SCUD 03.08.2014, Securities Available

____

i) A first charge and mortgage of all the borrower's immovable properties.

ii) Pledge over 51% of the equity shares of the borrower.

iii) A first charge on all the intangible assets of the borrower.

iv) Personal guarantee of Shri Sanjay Kumar Surekha (Promoter)

v) Corporate guarantee of Concast Infratech Limited. As per LIE Report:70.00% As per IE Report : 56.00%

PhysicaUFinancial Progress Status of the project a) MPRDC, in the month of April'2015 had terminated the

Concession Agreement on account of slow progress, non-achievement of Milestones, default in payment of penalty. The lenders as well as developers, requested MPRDC and Appellate Authority to provide adequate chance and time to remedy the situation / identify substitute, which, however was not considered.


c) The borrower invoked the process of arbitration under clause 44.3 of Concession Agreement. MPRDC has suggested to invoke clause no 44.4 of the Concession Agreement as Govt. of Madhya Pradesh has constituted a separate Arbitration Tribune to deal with such cases.

d) The lenders have decided to conduct a "Special Audit" of the SPV to ascertain the end use of the funds infused.

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i) Through process of Arbitration/Arbitration Tribunal. ii) The Lenders have decided to initiate legal action by recall

of loan, invocation of guarantee and filing recovery suit before DRT.

iii) After the initiation of legal action in DRT, lenders may join, "without prejudice", the Arbitration process as in (i) above.

iv) Lenders may proceed against MPRDC in High Court, to put stay on CPC work and to compensate the lenders to the extent of work done in the project.

v) The initiation of legal action/special audit is expected to put pressure on the Promoter to come up with a proposal for settlement of dues (It may be highlighted here that in Concast Jawasa project the Corporate guarantee of the flagship company of the group viz., Concast Steel & Power (CSP) is available. Thus action taken in the case by invoking the guarantee of CSP and also by possible filing for its winding up is expected to put elevated pressure on the Promoter to come up for an acceptable settlement).

Possible avenues for Recovery:-

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CONCAST JAWASA ROAD PROJECTS PVT um. Project In Brief

•

Design and Development of Intermediate Laning/ Two Laning including the construction, operation, maintenance and management (DBFOT) of two major district roads (MDR) i.e Jawasa-Sunarpura Road (22.63 Km) & Pawai-Prithvipura Road (22.343 Km) under package viii on annuity basis in the state of Madhya Pradesh.

TPC and Means of Finance

Z 74.77Cr. Debt: Z18.69 Cr. Equity: 256.08 Cr

Promoters Equity Envisaged Equity: 218.69 Cr. Equity Infused: Z18.93 Crore as per CA certificate dated: 16.06.2014.

Banks/FIs involved (in Cr)

Name or Bank/FI

Amount Sane. Amount Disb.

Corporation Bank

42.00 35.68

IIFCL 14.08 11.97 TOTAL 56.08 47.65

Project Progress As per LIE: 55.00% As per IE: 38.00%

Securities Available i) A first charge and mortgage of all the borrowers' immovable properties.

ii) Pledge over 51% of the equity shares of the borrower. iii) A first charge on all the intangible assets of the

borrower. iv) Personal guarantee of Shri Sanjay Kumar Surekha

(Promoter) v) Corporate guarantee of Concast Infratech Limited. vi) Corporate guarantee of M/s Concast Steel & Power.

Status of the project a) MPRDC, in the month of April'2015 had terminated the Concession Agreement on account of slow progress, non-achievement of Milestones, default in payment of penalty. The lenders as well as developers, requested MPRDC and Appellate Authority to provide adequate chance and time to find the suitable substitute for the project, however the same was not considered.

b) MPRDC proceeded to award the project on EPC mode to different contractor.



Possible avenues for Recovery:-

i) Through process of Arbitration/Arbitration Tribunal.

ii) The Lenders have decided to initiate legal action by recall of loan, invocation of guarantee and filing recovery suit before DRT.

iii) After the initiation of legal action in DRT, lenders may join, "without prejudice", the Arbitration process as in (a) above.

iv) Lenders may proceed against MPRDC in High Court, to put stay on EPC work and to compensate the lenders to the extent of work done in the project.

v) The initiation of legal action/special audit is expected to put pressure on the Promoter to come up with a proposal for settlement of dues.

vi) It may be highlighted here that in this project the Corporate guarantee of the flagship company of the group viz., Concast Steel & Power (CSP) is available. Thus action taken in this case by invoking the guarantee of CSP and also by possible filing for its winding up is expected to put elevated pressure on the Promoter to come up for an acceptable settlement.

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CONCAST MORENA ROAD PROJECTS PVT LTD.

Project Description Two Laning work of the existing road viz. Morena-Sabalgarh section of SH-02 from +junction at Km 0/10 to Km 73/6 at sabalgarh ( Total Length — 72.6 Km and design length —71.864 Km ) in the state of Madhya Pradesh on DBFOT on Toll + annuity Basis (Total Length 71.864 kms)


Z165.75 Cr. Debt: Z124.31 Cr. Equity:41.44 CR. (Z22.00 Cr. equity is infused as per CA certificate)

Bank/Fls involved Name of Bank/FI Amount Sanc. Amount Disb. (Z in Crore) United Bank Of 42.16 18.76

India (LB) Vijaya Bank 25.00 11.14 Indian Overseas 24.00 10.79 Bank IIFCL 33.15 14.75. TOTAL 124.31 55.34

SCOD 30.04.2016 Physical/Financial As per LIE report, the cumulative physical progress is 20.61% Progress and Cumulative financial Progress is 27.49% '

Securities Available A first charge and mortgage of all the borrower's immovable properties.

ii) Pledge over 51% of . the equity shares of the borrower.

iii) A first charge on all the intangible assets of the borrower.

iv) Personal guarantee of Shri Sanjay Kumar Surekha (Promoter)

v) Corporate guarantee of Concast Infratech Limited. Status of the project a) MPRDC, in the month of Feb'2015 had terminated the

Concession Agreement on account of slow progress, non- achievement of Milestones, default in payment of penalty. The lenders as well as developers, requested MPRDC and Appellate Authority to provide adequate chance and time to remedy the situation / identify substitute, which, however was not considered.



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i. Through process of Arbitration/Arbitration Tribunal. Possible avenues for ii. The Lenders have decided to initiate legal action by Recovery:- recall of loan, invocation of guarantee and filing

recovery suit before DRT. iii. After the initiation of legal action in DRT, lenders may

join, "without prejudice", the Arbitration process as in (i) above.

iv. Lenders may proceed against MPRDC in High Court, to put stay on EPC work and to compensate the lenders to the extent of work done in the project.

v. The initiation of legal action/special audit is expected

to put pressure on the Promoter to come up with a proposal for settlement of dues (It may be highlighted here that in Concast Jawasa project the Corporate guarantee of the flagship company of the group viz., Concast Steel & Power (CSP) is available. Thus action taken in the case by invoking the guarantee of CSP and also by possible filing for its winding up is expected to put elevated pressure on the Promoter to come up for an acceptable settlement).

M/s:ATLANTA INFRA ASSETS LIMITED

Project Description Improvement, Operation and Maintenance including Strengthening and Widening of existing 2-lane road to 4-lane dual carriage way from Km 9.200-Km 50.000 of NH-6 (Nagpur-Kondhali Section)in the State of Maharashtra on

BUT Basis (Toll based) Concessioning Authority

NHAI

Concession Period 20 years from appointed date (07.06,2006) Rs 316.47 crore Actual Project Cost

Bank/FIs Debt (Z in Crore)

Total

Name of the lender Sanctioned in Rs crore

Principal Outstanding

8.53 Corporation Bank 10.00 Dena Bank 100.00 92.16 Dombivili Nagari Sahakari Bank

10.00 6.95

IIFCL (Direct+Take Out)

96.00 89.39

Union Bank of India

40.00 20.88

256.00 217.91 COD COD achieved on 22.09.2011. Securities Available i) A first mortgage and charge on all the borrowers'

immovable properties, both present and future. ii) A first charge by way of hypothecation of all the

Borrower's moveable assets, both present and future, save and except the project assets

iii) A first charge on Borrower's receivables. iv) A first charge over all the accounts of borrower ,

including without limitation, Escrow a/c, retention a/c and other bank accounts

v) Pledge of shares held by consortium aggregating to 51% of paid up and voting equity share capital and 51% of paid up preference share capital of borrower during the construction period, which shall be released by Security Trustee from pledge so created on occurrence of COD

vi) A first charge on all the intangible assets of the borrower.

vii) An irrevocable and unconditional corporate guarantee of the Promoter guaranteeing shortfall in payment of termination payment by NHAI, upon termination of concession agreement due to concessionaire event of default during any time up to the COD.

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Status of the project • The project has achieved COD on 22.09.2011 against

scheduled COD of 08.12.2008. • Due to the delay in project completion because of various

reasons like land acquisition, forest clearance etc , the project has suffered cost overrun.

• The company is presently charging toll only for length of 39.814 km and balance stretch of 0.986 km is yet to be provided by NHAI, after which 100% toll can be charged against existing 75% of actual toll charge. The handing over is expected within one year.

• Further Post-COD, due to delay in infrastructure developments around the project stretch, the toll collection is less than the estimated value.

• As per provisional balance sheet of FY 2015, the total toll collection is Rs 24.88 crore.

Avenues for Recovery:-

a) The project is generating cash flows, which may increase once balance stretch

of 0.986 km land is handed over by NHAI, as the toll rate will increase by

25% .

b) The project may also be re-structured for which the promoter has given a proposal where he has indicated that they will be able to repay the full debt if

the existing repayment is rescheduled till 2025-26 at an interest rate of 10.50 %

p.a.. c) As the project has achieved COD, the lenders have a protection to get atleast

90% of debt due in the event of termination by NHAI due to concessionaire

event of default.

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M/s: MORA TOLLWAYS LIMITED

Project Description Augment the existing road from km 0.000 to km 116.760 (approximately 117.00 km) on the Mohania-Ara section of NH-30 in Bihar by Four-Laning on design, build, finance, operate and transfer (DBFOT) (Toll) basis.

Concessioning Authority

Bihar State Road Development Corporation Limited (BSRDCL)

Concessionaire Group

Atlanta Group

Concession Period 25 years from appointed date i.e. 14 10.2013 TPC & means of Finance

Component Rs in crore Debt 700 Equity 702 Grant 298 Total 1200

Bank/FIs involved (Z in Crore)

Name of Lender Sanctioned in Rs crore

Principal Outstanding in Rs crore

Union Bank of India (Leader)

200.00 88.88

Bank of Baroda 200.00 89.97 Punjab and Sind Bank

100.00 46.49

Oriental Bank of Commerce

100.00 44.87

IIFCL 80.00 35.91 Dombivilli Nagari Sahak

20.00 9.41

Total 700.00 315.53

SCOD 20.03.2016 Securities Available i) A first mortgage and charge on all the borrower's

immovable properties, both present and future. ii) A first charge on all the borrower's tangible

moveable assets, including but not limited to all current/non-current assets, moveable plant and machinery, furniture, fixtures, vehicles both present and future, save and except project assets

iii) A first charge on all borrower's bank accounts iv) A first charge on all the intangibles of the borrower. v) Irrevocable and unconditional guarantee from the

Sponsor (Atlanta Infra Assets Limited) vi) Pledge of shares held by sponsor aggregating to

51% of paid up and voting equity share capital of borrower until COD.

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Physical/Financial Progress

Physical Progress as per IE of BSRDCL-22.60% Physical Progress as per LIE-28.46% Financial Progress- 47% as per CA certificate dated 23.12.2014

• The project was bid keeping in mind the facilities of aggregates from enumerated stone quarries in possession of Government of Bihar, which was later not awarded. This led to an increase in cost for procuring the aggregates from neighbouring states and the issue could not be resolved, for which there was no provision of extra lead of aggregates in the Concession Agreement

• In August 2014, the concessionaire issued notice to the Authority by calling upon the Authority to cure the defaults including non-payment of tranche of grant of Rs 105,785 crore, non payment of additional cost for the procurement of longer leads amounting to Rs 5.63 crore, failing to procure entire right-of-way within 90 days from appointed date (14.10.2013), etc.

• Subsequently, in February 2015, the concessionaire issued termination notice to the authority citing authority default and has claimed Rs 600 crore in accordance with provisions of concession agreement which includes debt due and 150% of adjusted equity.

• The concessionaire thereafter filed a Writ Petition and Interlocutory Application in High Court of Patna seeking relief that the Authority shall pay the termination payment to the concessionaire.

• Meanwhile in June 2015, authority also terminated the concession agreement on 10.06.2015, stating concessionaire default of non-achievement of mile stones.

• However High Court of Patna on 22,09.2015 based on IA by the concessionaire, has set aside the termination notice issued by the Authority in June 2015 with liberty to the respondents to take recourse to dispute resolution as defined in Article 44 of the concession agreement.

Status of the project

Avenues for Recovery:-

a) Through legal process i.e. dispute resolution mechanism under the provisions of the Concession Agreement.

b) The Lenders have decided to file suit in DRT, against the company/guarantors for recovery of the debt.

c) To invoke the guarantees available to the lenders. d) Substitution of Concessionaire.

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