A one-time settlement (OTS) offer of Rs 800 crore has been received from road asset developer HKR Roadways for bad loans totalling Rs 1,428 crore by the Canara bank consortium lenders. SBI Capital Markets has pursued matching or higher bids for the settlement of the company’s unpaid loans.
Lenders have been using the OTS route to exit stressed assets, were few other options open to them. A call for other bids is part of the procedure because public sector banks don’t want to be accused of wrongdoing by taking large haircuts and returning a business to its promoters. Gayatri Highways and Megha Engineering Networks collectively own 37 per cent of HKR Roadways. According to a bid document, DLF & Associates owns the remaining 26% of the company. Canara Bank owed Rs 279 crore, Punjab National Bank Rs 281 crore, Union Bank of India Rs 323 crore, Indian Overseas Bank Rs 192 crore, IIFCL Rs 169 crore, and Indian Bank Rs 94 crore as of November 1, 2019.
HKR Roadways is a special purpose vehicle established on August 9, 2010, for planning, constructing, financing, operating, and maintaining a four-lane segment of the existing Hyderabad-Karimnagar-Ramagundam road (SH-1) in Telangana on a plan, construct, finance, operate, and transfer (toll) basis. The project was expected to cost Rs 2,209 crore, with a debt of Rs 1,525 crore, equity of Rs 230 crore, and a grant of Rs 454 crore being used to fund it. The project’s initial commencement of operations (COD) date was August 12, 2013. However, the company approached the lenders to extend the COD due to delays in securing the right of way approvals from railway authorities for over and under bridges. The lenders approved the adjustment in COD to March 31, 2015, based on the requests. Toll selection for the project began on June 1, 2014. The company completed a 4.856-kilometre stretch, bringing the total length of the completed stretch to 195.05 kilometres. The business had been collecting transaction fees for the 195.05 km stretch since the toll revision in June 2016.
“Across all vehicle types, there has been a substantial underperformance in traffic and sales relative to initial forecasts from the first year of operations. The account has been declared non-performing by all lenders,” according to the bid paper.
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