Kotak Special Situations Fund (KSSF) on Wednesday said it has acquired 74 per cent stake in HKR Roadways Ltd, and funded the debt in the company for a one-time settlement (OTS) with existing lenders for a total consideration of Rs 715 crore.
HKR Roadways, a special purpose vehicle owned by a consortium led by Gayatri Group, was awarded a 25-years concession by the Andhra Pradesh Road Development Corporation. The four-lane toll highway project of the existing Hyderabad-Karimnagar-Ramagundan section of state highway 1 was under design, build, finance, operate and transfer basis.
"The 207-km toll highway project commenced operations from June 2014. However, due to delays in the right of way and significant under performance of traffic vis-a-vis initial estimates, the account became a non-performing asset (NPA) with all lenders," Kotak Investment Advisors said in a statement.
The existing consortium of lenders to HKR has sanctioned a one-time settlement of all the dues, subject to a Swiss Challenge auction. Post settlement of dues, HKR Roadways will no longer be a NPA account. This is the first successful funding and resolution of debt in road sector for KSSF.
"HKR requires additional capex to achieve commercial operation date, and we expect a turnaround in the next few years. KSSF will continue to offer a full cash settlement, a much better option than non-cash options and is fully geared to fund pre-packaged solutions under IBC, as and when the rules are notified," KSSF CEO Eshwar Karra said.
KSSF is an alternative investment fund under SEBI regulations managed by Kotak Investment Advisors Ltd (KIAL), a part of Kotak Mahindra Bank. which focuses on alternate assets business. KSSF currently manages a USD 1 billion fund with a mandate to invest in special situations, credit and distressed space in India.