Infrastructure India (IIP) has announced that it has agreed extensions to the maturity of two of its loans. These are an existing US$48.4m unsecured bridging loan facility (originally provided to the Company in June 2017 by Cedar Valley Financial) and an existing US$21.5m working capital loan (originally provided to the Company in April 2013 by GGIC, Ltd). These extensions give the company more time to complete its ongoing financing discussions with PSA international (see below). It should be noted that, according to IIP, GGIC is interested in 75.4% of the Company’s issued share capital (directly and indirectly) and Cedar Valley is an affiliate of GGIC.
Discussions with PSA International continue to progress
IIP announced on 31 July 2018, that it had entered into conditional proposed financing agreements for up to US$125 million with PSA International, a global port group, and Gateway Partners. The transaction includes the issue of convertible preference shares in Distribution Logistics Infrastructure India, Distribution Logistics Infrastructure Limited’s parent company, for a consideration of US$75m and the sale of 24% of DLI by the Group for a consideration of US$50m. IIP says that, following IIP shareholder approval of the Proposed Financing at an extraordinary general meeting on 24 August 2018, the parties continue to progress towards completion.
IIP says that, ahead of completion of the Proposed Financing, IIP has agreed an extension to the maturity date of the Bridging Loan and an extension to the maturity date of the Working Capital Loan.
Possible partial repayment of the loans following completion of proposed financing
The Company says that it remains in discussions with Cedar Valley Financial and GGIC, Ltd in relation to the possible partial repayment of the Bridging Loan and the Working Capital Loan following the completion of the Proposed Financing and with a view to further extending the maturity of both the Bridging Loan and the Working Capital Loan.
Bridging Loan Extension
The Bridging Loan was originally provided to the Company in June 2017 by Cedar Valley in an amount of US$8.0 million and was subsequently increased in multiple tranches, most recently to US$48.4 million in October 2018. The Bridging Loan currently carries an interest rate of 12.0% per annum on its fully drawn US$48.4 million principal and had been due for repayment by the Company on the earlier of: (i) 15 days following the completion of the Proposed Financing; or (ii) 7 December 2018. IIP and Cedar Valley now have agreed to extend the maturity of the Bridging Loan such that the Bridging Loan will now mature on the earlier of: (i) 15 days following the completion of the Proposed Financing; or (ii) 14 December 2018. The other terms of the Bridging Loan remain unchanged.
Working Capital Loan Extension
The Working Capital Loan was originally provided to the Company in April 2013 by GGIC in an amount of US$17 million in April 2013 and increased to US$21.5 million in September 2017. The Working Capital Loan currently carries an interest rate of 7.5% per annum on its fully drawn down US$21.5 million principal and had been due for repayment by the Company on 7 December 2018. IIP and GGIC have now agreed to extend the maturity of the Working Capital Loan such that the Working Capital Loan will now mature on 14 December 2018. The other terms of the Working Capital Loan remain unchanged.
IIP says that there are no arrangement or commitment fees payable by IIP in connection with the Bridging Loan Extension or the Working Capital Loan Extension.
Are these transactions fair?
IIP says that the independent directors of IIP, M.S. Ramachandran and Timothy Walker, consider, having consulted with Smith & Williamson Corporate Finance Limited in its capacity as the Company’s nominated adviser, that the terms of the Bridging Loan Extension and the Working Capital Loan Extension are fair and reasonable insofar as the shareholders of IIP are concerned.