India's IL&FS Set to Sell Stake in its Oil Storage Venture at Fujairah
12.09.2019 - NEWS

December 09, 2019 [Arabian Business] – IL&FS subsidiary, IL&FS Maritime Infrastructure Company Limited holds close to 81 percent and PTF holds the remaining 19 percent stake in IPTF.

Infrastructure Leasing & Financial Services Ltd (IL&FS), the debt-ridden Indian infrastructure company, is understood to be close to striking a deal with Prime Terminal FZE (PTF), the local partner in its fuel storage venture at Fujairah, IL&FS Prime Terminals FZC (IPTF), to sell off its entire stake.

IL&FS subsidiary, IL&FS Maritime Infrastructure Company Limited (IMICL) holds close to 81 percent and PTF holds the remaining 19 percent stake in IPTF.

“The two companies are close to reaching an in-principle agreement on the sale deal. The modalities are being worked out now,” a senior official of the Indian ministry of corporate affairs told Arabian Business.

“The proposal [on the sale of IMCIL stake in ITPF] has been given the go ahead by the team under retired Supreme Court judge Justice D K Jain, who is supervising the entire debt resolution process of IL&FS,” the senior federal corporate affairs ministry official added.

India’s corporate affairs ministry had taken over IL&FS in October last year, after the company started defaulting on payment obligations to banks and other institutions, bringing the entire financial market in the country to a brink.

Abu Dhabi Investment Authority (ADIA) is the third largest shareholder in IL&FS, holding a 12.56 percent stake as per IL&FS’s 2018 annual report.

Industry sources said the proposed deal with PTF comes after the failed efforts by IL&FS to sell its stake in the Fujairah storage venture through an international bidding process early this year.

The Indian company had engaged Houlihan Lokey, the US-based investment banker, to handle the stake sale process. Subsequently, Houlihan Lokey had invited expression of interest (EoI) for the sale bid in February this year.

IPTF owns and operates a state-of-the-art, independent bulk petroleum storage terminal, located in the Fujairah Oil Industry Zone at Al Sudah in close proximity to the Port of Fujairah, one of the world’s largest bunker ports.

The terminal, commissioned in March 2015, consists of 17 above ground, carbon steel storage tanks, including 3 utility tanks for slop, fire water and diesel and 14 product tanks, with a capacity of 333,484 cubic meters. It is equipped to handle a range of black and white fuel oil products such as heavy fuel oil, gas oil, diesel, jet fuel and gasoline.

IL&FS, currently facing the insolvency process before India’s insolvency court – National Company Law Tribunal (NCLT), has been in the process of selling off its assets, including overseas companies for some time now to settle its massive debt.

As part of this, it has also struck a deal with NextGen Parking (NGP) recently to sell its joint venture in Dubai – the robotic automated parking system at Dubai Courts. The deal, however, ran into hurdle with the Export Import Bank of India (Exim Bank) declining to provide a no objection certificate (NoC) for the sale.

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