US$105m Financing & Restructured Existing Loans

RNS Number : 7611U

Infrastructure India plc

02 April 2019

 

2 April 2019

Infrastructure India plc

("IIP", the "Company and together with its subsidiaries the "Group")

US$105 million Loan Agreement

Restructuring of Existing Loans

Infrastructure India plc, an AIM quoted infrastructure fund investing directly into assets in India, announces that the Group has agreed a conditional proposed financing with IIP Bridge Facility LLC (the "Lender"), an affiliate of GGIC, Ltd. ("GGIC") pursuant to which a debt facility of up to US$105 million (approximately £80.2 million), before expenses, will be made available to the Group (the "Loan").

The Loan is expected to provide sufficient capital to enable Distribution Logistics Infrastructure Private Limited ("DLI"), the Company's wholly owned subsidiary, to complete, commission and ramp up all of its existing terminal facilities through to completion, to meet other DLI lender requirements and provide additional working capital for both DLI and the Group.

Whilst obtaining longer term finance has taken longer than anticipated due to a range of issues outside of the Company's control, the Board is pleased that the financing will provide both sufficient time and capital for DLI to execute its business plan.

DLI is a supply chain transportation and container infrastructure company headquartered in Bangalore and Gurgaon with a material presence in central, northern and southern India. DLI provides a broad range of logistics services including rail freight, trucking, handling, customs clearing and bonded warehousing with terminals located in the strategic locations of Nagpur, Bangalore, Palwal (in the National Capital Region) and Chennai. DLI is the largest asset in the Company's portfolio and one of the largest privately owned Indian logistics businesses. As at 30 September 2018 DLI had an unaudited carrying value, based on business case assumptions as at that time, of £168.7 million.

Additionally, in accordance with the requirements of the Loan, the Company confirms that it has agreed amendments to the existing US$64.1 million Cedar Valley Financial bridging loan (the "Bridging Loan") and the existing US$21.5 million GGIC, Ltd working capital loan (the "Working Capital Loan") to extend the maturities of these two facilities. In securing the maturity extensions of the Bridging Loan and the Working Capital Loan, both facilities have also been amended to carry an interest rate of 15% per annum going forward.

Loan Agreement

The Loan consists of a secured four year term loan to IIP's wholly owned Mauritian subsidiary, Infrastructure India Holdco ("IIP Holdco") of up to US$105 million and available to the Group in tranches. The Loan carries an interest rate of 15%, calculated in a manner that yields a 15% IRR for the Lender (increasing to 18% per annum in the event of default) and payable at maturity, and is secured on all assets of IIP Holdco, including 100% of the issued share capital of Distribution Logistics Infrastructure India ("DLII"), DLI's Mauritian parent company.

The Loan matures on 1 April 2023, is voluntarily repayable without penalty and is otherwise mandatorily proportionally repayable from the net proceeds of Group asset realisations in excess of US$500,000. The Loan consists of two tranches:

·    US$8.7 million to be drawn down by the Group on 5 April 2019 (the "Initial Loan"). The proceeds of the Initial Loan will be applied by the Group towards the repayment of a US$7.5 million increase (together with accrued interest) in the Bridging Loan announced on 22 March 2019 and towards transaction costs in connection with the Loan; and

·    US$96.3 million to be made conditionally available to the Group in one or more additional loan(s) (the "Additional Loan"). IIH will be permitted to annually distribute funds to IIP to meet its budgeted operating expenses, as agreed with the Lender.

The Additional Loan will be available to the Group subject to, inter alia: (a) receipt of consents from IIP lenders (the "IIP Lenders") agreeing to extend the maturity of IIP's existing indebtedness to until at least 90 days after the scheduled maturity of the Loan; (b) the IIP Lenders agreeing not to exercise any remedies in respect of existing loans until the Loan is repaid in full; and (c) to second ranking security to be granted to IIP Lenders on a pari passu basis over the same assets and on the same terms as the security to be granted to the Lender under the Loan together with such subordination arrangement to be agreed between the IIP Lenders and the Lender.

As set out below, the agreements to effect the required maturity extensions and waivers of remedies in relation to the Bridging Loan and the Working Capital Loan have been received as of the date hereof.

Whilst not a condition precedent to the Initial Loan or to the Additional Loan, at the written request of the Lender, IIP will be required to use its best efforts to convene a general meeting seeking IIP shareholder approval to put in place escrow arrangements to deposit duly executed documentation in escrow that, in the event of default under the Loan, would enable accelerated remedy for the Lender and result in (a) the transfer by IIP Holdco of 100% of the share capital of DLII to a person designated by the Lender; (b) the resignation of at least a majority of the directors of DLII then in office; and (c) the appointment of a number of directors designated by the Lender constituting a majority of the board of DLII after giving effect to the resignations described in (b) above (the "Accelerated Remedies"). Should the Company be unable to receive shareholder approval for the Accelerated Remedies within 45 days from the Lenders' request, an event of default under the Loan shall occur.

Details of the extension of the Bridging Loan (the "Bridging Loan Extension") and the extension of the Working Capital Loan ("Working Capital Loan Extension"), required to satisfy the primary condition precedent to the Additional Loan, are set out below.

Under the Loan agreement, IIP has agreed to meet the reasonable costs of the Lender in connection with the Loan documentation incurred to date up to a maximum of US$750,000.

There are no other fees payable by the Group to the Lender.

 

The Directors of IIP consider, having taken into account the funding options previously explored and currently available to the Company, and the immediate funding needs of the Group, that the Loan is in the best interests of the Company and shareholders as a whole.  

Bridging Loan Extension

The Bridging Loan was originally provided to the Company in June 2017 by Cedar Valley Financial in an amount of US$8.0 million and was subsequently increased in multiple tranches, most recently to US$64.1 million in March 2019.  

The Bridging Loan currently carries an interest rate of 12.0% per annum on its fully drawn US$54.1 million principal and had been due for repayment by the Company on 1 April 2019.

Pursuant to the Bridging Loan Extension, the Company and Cedar Valley have agreed to extend the maturity of the Bridging Loan such that the Bridging Loan will now mature on the earlier of: (i) 30 June 2023; and (ii) the repayment/prepayment of the Loan in full and the Bridging Loan will carry an interest rate of 15% per annum going forward.

Furthermore, the Company will utilise the proceeds of the Initial Loan to repay US$7.5 million of the Bridging Loan (together with accrued interest) most recently drawn down, as announced on 22 March 2018, such that the drawn principal under the Bridging Loan (following this partial repayment) will amount to US$56.6 million.

Additionally, Cedar Valley Financial has agreed not to exercise any remedies available to it under the Bridging Loan prior to the Loan being irrevocably repaid in full.

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 1 April 2019.

Pursuant to the Working Capital Loan Extension, the Company and GGIC have agreed to extend the maturity of the Bridging Loan such that the Bridging Loan will now mature on the earlier of: (i) 30 June 2023; and (ii) the repayment/prepayment of the Loan in full and the Working Capital Loan will carry an interest rate of 15% per annum going forward.

Additionally, GGIC has agreed not to exercise any remedies available to it under the Working Capital Loan prior to the Loan being irrevocably repaid in full.

There are no arrangement or commitment fees payable by IIP in connection with the Bridging Loan Extension or the Working Capital Loan Extension.

Effects of the Loan

Pursuant to the Loan, an aggregate of up to US$105 million (approximately £80.2 million) before expenses will be conditionally made available to the Group. The net proceeds of the Loan will provide construction and working capital to DLI and will provide additional working capital for the Group.

The proceeds from the Loan are expected to enable DLI to finance the construction of all existing DLI terminals through to completion, to meet other DLI lender requirements and to provide DLI with additional working capital.

At Group level, the proceeds from the Loan available for upstreaming to the Company are expected to satisfy the Company's working capital requirements during the term of the Loan.

Current trading and prospects

The unaudited Net Asset Value of the Group as at 30 September 2018 decreased to £145.3 million (£0.21 per share), compared to a Net Asset Value of £237.8 million (£0.35 per share) on the same date one year earlier.  

The Loan is expected to provide sufficient capital for IIP's largest asset, DLI, which is not yet cash generative, to complete its existing terminal network and ramp up operations and will provide DLI with the opportunity to seek to capture the significant growth opportunities in the logistics sector.

Related Party Transactions

The Lender and Cedar Valley Financial are affiliates of GGIC. GGIC is, directly and indirectly, interested in 75.4% of the Company's issued share capital. Under the AIM Rules for Companies ("AIM Rules") IIP Bridge Facility LLC, GGIC and Cedar Valley Financial are each, therefore, deemed to be related parties of the Company and the Loan, the Bridging Loan Extension and the Working Capital Loan Extension are related party transactions pursuant to Rule 13 of the AIM Rules.

The independent directors of IIP, M.S. Ramachandran and Timothy Walker, consider, having consulted with Cenkos Securities plc in its capacity as the Company's nominated adviser, that the terms of the Loan, the Bridging Loan Extension and the Working Capital Loan Extension are fair and reasonable insofar as the shareholders of IIP are concerned.

Enquiries:

Infrastructure India plc        Sonny Lulla	www.iiplc.com
Cenkos Securities plc Nominated Adviser & Joint Broker Azhic Basirov / Ben Jeynes	[phone]
Nplus1 Singer Advisory LLP Joint Broker James Maxwell - Corporate Finance James Waterlow - Investment Fund Sales	[phone]
Novella	[phone]
Financial PR
Tim Robertson / Toby Andrews

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

 

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