PingAn emerges highest bidder for IL and FS stake in China's CYEL

According to sources, PingAn has bid for the IL&FS stake in CYEL at an aggregate equity valuation of around $250 million, covering 100 per cent debt of CYEL.

IL&FS holds 49 per cent stake in CYEL through its Singapore-based subsidiary ITNL International Pvt Ltd (IIPL). The balance majority stake in CYEL is held by Chongqing Expressway Group (CEG).

PingAn Insurance (Group) Company is one of the largest financial services companies in the world. It is ranked seventh on the Forbes Global 2000 list and 29th on the Fortune Global 500 list. The company is listed on the stock exchanges in Hong Kong and Shanghai.

People in the know of the developments said that in-principle approval has been received from IIPL lenders for completing the transaction and lenders of CYEL are being approached for their respective approvals.

Sale proceeds of the agreement would largely be used to pay the senior secured lenders in IIPL, the bond holders and unsecured inter-corporate loans.

Once approved, this will resolve nearly Rs 2,500 crore of the overall IL&FS debt.

An IL&FS spokesperson said: "IL&FS Group is in the process of discussing the definitive documents with the H1 bidder. The deal is expected to close in couple of months. The Yuhe asset is held by a wholly owned Singapore based subsidiary of ITNL and the sale proceeds are sufficient enough to take care of the debt obligations of the Chinese entity as well as the external secured debt obligations of the Singapore entity."

"The lenders to the Chinese asset would continue to remain invested in the project debt. While in-principle approvals from the project and other lenders are in place, other approvals for the transaction would be sought once the definitive documents have been executed with the H1 bidder," he added.

Chongqing Yuhe Expressway Company Limited currently holds a concession for a toll-based expressway of approximately 58.72 km in China Mainland, over which it has the right to collect toll from users.

Around 13.25 years of the term of the current concession remain as of March 31, 2019, and Chongqing Yuhe Expressway Company Limited has the rights to collect toll from users and subsidies from the Chinese government for the balance period of the concession.

ITNL Offshore PTE Ltd (IOPL) and IL&FS International PTE Ltd (IIPL) are two Singapore based subsidiaries of IL&FS Transport Network Limited (ITNL), a subsidiary of IL&FS.

IOPL had raised $141 million dim-sum bonds, at 7.5 per cent, payable in 2021, guaranteed by ITNL. These funds were advanced as unsecured loans to IIPL to refinance its liabilities. IIPL holds investments in China, the UAE and the US with CYEL being the biggest asset under IIPL.

IOPL, in its recent filing in a Singapore court, had said that the company was "committed to engaging in consensual discussion with Trustees wrt (with regard to) its obligations under the Notes and distribution of any recoveries from repayment of loan."