Infrastructure India edging closer to insolvency? – Infrastructure India has requested, but not yet been granted, a further extension of the date of maturity of the existing US$53.4 million unsecured bridging loan facility and the existing US$21.5 million working capital loan, both of which matured on 4 February 2019.
On 31 July 2018, it announced that it thought it had agreed funding of up to US$125 million with PSA International, a global port group, and Gateway Partners. The financing was conditional on receipt of Indian regulatory and other approvals by 30 January 2019. This was not forthcoming and so the transaction lapsed on 30 January 2019. Infrastructure India’s board has been trying to come up with an alternative plan but, in the meantime, the logistics subsidiary, DLI, has been using short-term financing secured on its own assets, diverting cash from operations to make payments as they fall due.
The bridging loans and working capital loans have been increased multiple times [so often that we stopped writing news articles about it]. The interest rate on the bridging loan is 12.0%, while the interest rate on the working capital loan is 7.5%. Following the failure of the PSA/Gateway deal, both were due for repayment on 4 February 2019.
The board has promised to make another announcement “in due course”.
[QD comment: It has been a long drawn out process but it seems to us that there is a reasonable chance that the lender will pull the plug. The lender owns the majority of Infrastructure India’s shares. QuotedData’s James Carthew tried to sort out Infrastructure India in December 2009, a fund he managed called a meeting to change the board and find a way of unlocking the value in the company. At the time, the shares were about 60p and the NAV was well north of that but other shareholders rejected this. Today, the shares are 1.5p.]
IIP : Infrastructure India edging closer to insolvency?
Update 6 February
Late on the 5th, Infrastructure India announced that the can had been kicked down the road again with the loans extended to 18 February
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