Federal Bank sells ITNL owned Chenani Nashri Tunnel debt to ACRE at 25% discount

Federal Bank has sold its loan exposure in Chenani Nashri Tunnelway Ltd (CNTL) to an Ares SSG Capital-backed asset reconstruction company at a discount of 25%, people with knowledge of the matter said. The Kerala-based lender sold the loan after the road asset’s owner, IL&FS Transportation Network Ltd (ITNL), failed to close a deal it signed almost a year ago with I Square Capital-backed Cube Highway to sell CNTL. Federal Bank recovered nearly 75 paise on a rupee by selling its Rs 212.63 crore loan to Assets Care & Enterprise Ltd, the people said. The transaction closed early this week, one of them said.

Cube Highways had offered Rs 3,900 crore, implying a recovery of nearly 82% for lenders. But the long stop date of the agreement lapsed on August 30 this year, which prompted the private bank to consider an out-of-court resolution. Cube Highways had offered 100% recovery of loans for secured creditors and a 40% recovery for unsecured creditors, the second person said. Federal Bank and ACRE did not respond to requests by ET for comment.

Chenani Nashri Tunnelway, now renamed Dr Shyma Prasad Mookerjee Tunnel, is India’s longest at 9.28 kms and is located on National Highway 44. It reduces the travel distance between Jammu and Kashmir by 30 km. The tunnel was opened for the public to use in March 2017 and has since been receiving a semi-annual annuity from the National Highway Authority of India (NHAI) of Rs 635 crore. State-run NHAI has awarded ITNL a semi-annual annuity until 2037.

The project cost of CNTL was pegged at Rs 5,454 crore, of which ITNL infused equity of Rs 372 crore and banks had provided loans of Rs 4,765 crore, according to a document seen by ET.

An income of Rs 700 crore through annuity by the company was distributed to lenders early this year. IL&FS group companies have a total exposure of Rs 1,295 crore in a combination of debt and equity in CNTL while other financial creditors have an exposure of Rs 4159 crore, documents show.


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