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Eredene may exit Ennore box terminal project if unable to raise loan funds - 2012-07-16

The Ennore Container Terminal project may be heading for a rebidding. The Bay of Bengal Gateway Terminal, the consortium that won the bid for the Rs 1,300-crore project, may forfeit the concession due to delay in getting debt funding, said Eredene, a consortium partner. The London-based Eredene is part of an international consortium led by Spain’s biggest port terminal operator Grup Marítim TCB. The consortium was awarded the build-operate-transfer project in June 2009 for 30 years. The consortium is continuing its efforts to secure debt funding. However, there is no guarantee that acceptable terms will be agreed with State Bank of India. If viable debt funding cannot be obtained, then the consortium may forfeit the concession, Eredene said in a statement today.

“Protracted negotiations continue to secure debt funding for the Ennore project. However, there is no guarantee that the consortium will be able to agree to acceptable financial terms with State Bank of India, particularly in the light of the negative change in the global and Indian funding environment,” Eredene said. Ennore Port Ltd, the concession awarding authority, had given Bay of Bengal Gateway time until April 30 to finalise debt funding. Due to the consortium’s failure to meet that deadline, Ennore Port had cashed a bid guarantee of Rs 14 crore (£1.7 million).

With this uncertainty on the debt funding, Eredene has written down its investment in Bay of Bengal Gateway by £0.9 million to nil and also provided in full for its £0.4 million share of the forfeited bid guarantee. If the Ennore project does go ahead, Eredene has negotiated to reduce its contribution to the total investment to about £14.2 million. As a result, Eredene’s board considers it probable that the concession will be terminated and so has taken the decision to write down the full £0.9 million value of its investment in Bay of Bengal Gateway Terminal, the statement says. Eredene is an India-focussed investment company. Eight of its 11 investee companies in India are now operational.

Despite a slowdown in India’s economic growth and continued uncertainty in the world’s financial markets, the companies generally performed satisfactorily during the 12 months till March 31, 2012, Eredene said in the statement.

Source : Hindu Business Line