IL&FS unit, lenders lock horns over future of some road assets

Lenders and the management of IL&FS Transportation Networks (ITNL) are at loggerheads over the future of certain road assets.
The lenders see value in selling the assets while ITNL wants a resolution by transferring the asset to its infrastructure investment trust (InvIT).

A focal point of contention is the Barwa Adda Expressway (BAEL), that has outstanding senior loans amounting to ₹1,269 crore.

Bank of Baroda, one of the lenders, has urged the management to sell the asset to a third party due to delays in debt settlement through the InvIT structure. The ITNL management, however, wants to resolve it through InvIT, which is likely to result in an additional recovery of ₹700 crore.

The differing positions of lenders and ITNL have created a deadlock for resolution of the asset. "IL&FS InvIT is facing prolonged delays and this is one of the reasons why lenders are opting for faster outright sales of some road assets at lower valuations," said a source. "Negotiations with lenders, restructuring processes, and approval delays have caused significant setbacks in completing the InvIT process."

The lenders of BAEL have filed a petition with the NCLT, requesting permission for a third-party bidder to conduct due diligence on the asset.

IL&FS has argued against the request since NCLT has already approved the resolution. "We have opposed this move by lenders to sell the asset to a third party at a substantially lower valuation as NCLT has already approved the transfer of BAEL to the InvIT at a substantially higher price resulting in value maximisation for all class of lenders," said an IL&FS spokesperson.

A Bank of Baroda spokesperson did not immediately respond to a request for comment.

Of the total loans of ₹1,269 crore held by five lenders, three lenders holding loans of ₹748 crore have already approved the restructuring proposal through the InvIT.