Raising Project Loan For State Govt. HAM Projects

Client Background

The company involved in this transaction is a Delhi-based EPC contractor doing road projects. The company is involved in construction of roads, highways, buildings, etc. for various Central (NHAI, MORTH, Ministries) & State Government (State PWD & Road Departments) authorities. The company has been in this business for the past 23 years and has executed orders worth more than INR 30 Bn till date.

The company has been one of the long-standing clients of Coinmen Capital. We have raised WC credit facilities for the company and advised the company at the time of formation of consortium for their working capital facilities.

PROBLEM STATEMENT

The company was awarded road projects by PWD, Maharashtra under the Hybrid Annuity Model (HAM) of the Maharashtra State Government amounting to INR 3.84 Bn, with a contract period of 12 years.

The company had purely been an EPC contractor since inception, with these being the first such projects for the company. In addition, these were the initial HAM projects launched by the Maharashtra State Government and are a modified version of the standard NHAI HAM Projects. Owed to this, the lenders had hesitations regarding the funding of these projects with concerns around budgetary support and equity matrix.

Goal Of The Transaction

To achieve financial tie-up for these projects in the form of structured project term loan.

Coinmen’s Role

  • We developed a financial model of the project, covering the contract tenor of 12 years
  • We finalized the appropriate structure of the transaction in accordance with the comfort of the lender’s policies and the client
  • We carried out extensive research on the policies of the Maharashtra State Government for HAM Projects and the comforts given by them to the lenders for the funding of the projects.
  • We also researched the market scenario and planned the fund-raising process accordingly.
  • We undertook the preparation of the Information Memorandum/Pitching Report for prospective lenders
  • We helped in the finalization of the term sheet for the transaction, after discussions with the lender and the client

Outcome Of The Transaction

  • We managed to arrange a project loan of INR 1.15 Bn for the 2 projects on competitive terms
  • We also helped the client in planning of the cash flows for the projects