HCC to sell 100% stake of Baharampore Farakka to Cube Highways at an enterprise value of Rs1,279cr; Stock rallies over 2%

2 Feb 2022 , 11:45 AM

Hindustan Construction on Wednesday announced that HCC Group has signed binding terms with C~lbe Highways and Infrastructure V Pte Ltd (“Cube Highways”) for 100% sale of Baharampore-Farakka Highways Limited (“BFHL”) at an enterprise value of Rs1,279cr implying an equity valuation of Rs600cr. In addition to the equity value, Rs200cr of earnout is payable in May 2024 contingent on achieving revenue thresholds.

Arjun Dhawan, HCC’s Group CEO, said, “HCC is proud of its PPP track record, having developed & operated Rs.7,000 crore of value-generating BOTs. The sale underscores our commitment to creating liquidity that will bolster both operations and future business growth.”

Furthermore, HCON will be entitled to a material revenue share for the life of the concession. HCON will be securitising part of these future BFHL receivables via a loan of up to Rs300cr, resulting in total liquidity to the Group of up to Rs900cr. BFHL has a balance concession period of 19 years.

The transaction is subject to closing adjustments, customary due diligence and approvals, including from the NHAI. The financial advisor for this transaction is Edelweiss Financial Services Ltd.

BFHL is a 101 km highway that forms part of the main arterial National Highway 12 (earlier National Highway 34) in West Bengal connecting Kolkata and the port of Haldia to North Bengal and North-Eastern states of India. Out of 101 km, BFHL is currently tolling 90 km and the balance 11 km of Baharampore Bypass will be tollable post-completion in Q4 FY23 which will increase the normal toll revenue by -45%.

At around 11.32 am, HCC was trading at Rs16 per piece up by 2.3% on Sensex.