IL&FS seeks higher bid for Chenani-Nashri Tunnel project in J&K

IL&FS, which had sold the Chenani-Nashri Tunnel (CNTL) project in J&K to Cube Highways & Infrastructure last December for Rs 3,900 crore, is looking for a new buyer or an updated proposal from the Singaporean highways player after the sale pact expiry and also a rise in valuation that has jumped to more than Rs 5,200 crore now.

CNTL is a subsidiary of IL&FS Transportation Networks, which had inked a Rs 3,900-crore share purchase deal with Cube in August 2020 but regulatory, involving NCLT and NHAI, permissions came late, leading to the agreement getting expired this August.

The tunnel, which reduces the travel time between Jammu and Srinagar by 31 km, was placed on the block in December 2018 after the parent IL&FS went bankrupt two months back.

The two-lane Chenani-Nashri tunnel was commissioned with a project value of Rs 5,269 crore in March 2017, with a concession term up to March 2032. The project received more than 24 bidders, and Cube's Rs 3,900 crore proposal was the highest. They confirm that the CNTL-Cube share purchase agreement has lapsed, and the updated fair price is higher than the earlier estimate.

The past valuation was done in 2018 and under pressure, but since then the collection from the tunnel traffic has updated and so is the debt resolution progress at IL&FS. The agreement expired not because of higher valuation or something else but because of setbacks in getting the necessary permissions.

A reply from Cube, which has created many India-related investments in infrastructure, is expected. Cube has already written to the government-appointed IL&FS board headed by banker Uday Kotak, marginally updating its proposal and asking for an extension of the share sale agreement timelines. Cube has additionally presented its revamped offer to the NCLT for permission. But the new bid is too marginal, and the board is likely to reject it.

Last week, the managing director of IL&FS Group, CS Rajan, had hinted that the group was assessing all options for a better cost. The options that can be assessed cover rebidding, invit, or a new agreement with Cube at updated valuation.

The board is assessing all available options, comprising updated value by Cube, to guarantee optimum realisation for all group creditors as per the approved resolution framework.

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