Infrastructure India gets a £95.5m life line from PSA – Infrastructure India (IIP) has announced that it has agreed a conditional proposed financing with PSA International and Gateway Partners and that US$125 million (approximately £95.5 million), before expenses, will be made available to IIP (the Group).
IIP has regularly announced increases in its bridging loans, bring the total to US$40.0m. This has been used to cover operational costs whilst it negotiated this current facility with PSA – click here to read more. In addition, IIP has an outstanding working capital loan of $21.5m which falls due in September 2018.
The money raised from PSA will provide sufficient capital to enable one of the company’s holdings and a key asset, Distribution Logistics Infrastructure Private Limited (DLI) to complete, commission and ramp up all of its terminal facilities. It will also provide additional working capital for both DLI and IIP. Significantly, it will enable IIP to repay or partially repay existing debt facilities in due course.
More on DLI
DLI is a supply chain transportation and container infrastructure company headquartered in Bangalore and Gurgaon with a material presence in central, northern and southern India.
- It provides a broad range of logistics services including rail freight, trucking, handling, customs clearing and bonded warehousing with terminals located in the strategic locations of Nagpur, Bangalore, Palwal (in the National Capital Region) and Chennai.
- DLI is the largest asset in the IIP’s portfolio and one of the top privately owned Indian logistics businesses.
Closer working relationship with PSA and DLI
PSA is one of the leading global port groups with significant port operations across Asia, Europe and the Americas
IIP points out in its announcement to the market that the partnership with PSA as a result of this deal will provide DLI with the additional expertise and know-how of an established global platform and enhanced marketing opportunities.
Details of the proposed financing deal:
- The issue by Distribution and Logistics Infrastructure India (“DLII”), DLI’s parent company, of up to 7,500 convertible preference shares in DLII’s capital (the “DLII CPS”) for an aggregate consideration of up to US$75 million; and
- The sale by IIP of existing ordinary shares in DLII representing 24% of DLII’s issued ordinary share capital (“Sale Shares”) currently held by the Group for a consideration of US$50 million.
IIP currently holds 100% of the share capital of DLI.
- Following the disposal of the Sale Shares, IIP’s interest in DLI will be reduced to 76%
- The conversion of the DLII CPS will take place based upon an enterprise valuation of DLI at 7.5x EBITDA for the 12 months ending 30 June 2021
- When that happens, IIP’s interest in DLI will be reduced to a minimum of 20% and a maximum of 49%
- However, if conversion of the DLII CPS follows a default as defined under any of the Transaction Documents, IIP’s interest in DLI could be reduced to zero
The net proceeds of issue of the DLII CPS will be used to provide construction and working capital to DLI and the proceeds from the sale of the Sale Shares are intended by the Board to be applied by the Group towards the repayment or partial repayment of existing IIP loan facilities in due course and to provide additional working capital to the Group.
[QD comment: it has been a long time coming but the PSA loan looks set to offer Infrastructure India some modest breathing space. Distribution and Logistics Infrastructure gets the funding it desperately needs but there are scenarios in which IIP may end up with zero value in this investment. IIP gets to pay off its expensive bridging loan but still won’t have enough money to repay its working capital loan. What happens in September isn’t clear. External shareholders are in a very small minority and the major investors are connected to the providers of the debt. The share price has jumped (up 80%) but this is a hard investment to value.]
IIP : Infrastructure India gets a £95.5m life line from PSA