The intended objective of Arshiya is to achieve an asset light model going forward, while Ascendas will potentially be getting a portfolio of income yielding Free Trade warehouses. The term sheet also envisages the financing of the future development on the available surplus land which has development potential of approx. 4 million sq.ft. within the existing notified area.
The indicative gross consideration envisaged is Rs 534 crore, to be paid in two tranches; Rs 434 crore upon signing of a definitive agreement and the balance Rs 100 crore to be paid over 4 years on achieving certain milestones. The majority of the monetization proceeds will be used by Arshiya for clearing a part of its dues to creditors and repayment of other liabilities post debt restructuring. All the 6 warehouses will be leased back under a master lease arrangement with Arshiya Group.
Arshiya has two revenue streams from its clients, one being from rent and the other from value added services in the ratio of approximately 1:1. Arshiya rental income would be significantly higher than the rental payout under the sale and lease back transaction and leave a surplus that would be retained by Arshiya. In addition, Arshiya would also benefit from the entire income from value added services.
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