Banks take over controlling stake in Karaikal Port in India
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State-owned Indian Bank has become majority owner of Karaikal Port Pvt Ltd after the company defaulted on repayment of loan.
To be more specific, Marg Ltd, an Indian construction company listed on the Bombay Stock Exchange, has lost control of the port.
Previously, an Indian Bank-led consortium of 12 state-owned banks had lent Rs18 billion (US$262.6 million) to the company to develop the port. Now the Indian Bank has invoked the pledge and transferred a total of 164,492,000 equity shares and 37,900,000 Compulsorily Convertible Preference Shares (CCPS) placed by Marg Ltd as collateral security.
After that, Marg has reduced its ownership to a 15.12% stake from a 67.58% stake and Indian Bank now holds 52.46% equity and 9.85% CCPS.
Other parties that have a stake in the port are the following: Ascent Capital Advisors India Pvt Ltd, NYLIM Jacob Ballas India (FVCI) III LLC, and Standard Chartered Private Equity (Mauritius) II Ltd.
It is located on the Eastern coast of India in Karaikal around 300 km along the coast south of Chennai Port. The port loaded a total of 4.89 million tonnes of cargo during the last financial year (ended in March 2015), which represents a drop of 21.5% from the 6.23 mt handled the previous financial year.
Karaikal Port project began with a Letter of Interest issued by Govt. of Pondicherry for development of a port at Karaikal in September 2005. MARG Ltd. signed the concession agreement in 2006 and work began in February, 2007. Phase 1 was envisaged to be operational in Aug 2009. Karaikal Port became operational in April 2009 when it received its first vessel. Phase 1 comprises 2 Panamax size berths capable of handling 5.2 million MT of cargo per annum. The port has received over 250 vessels since Commercial Operations and has handled over 5 million MT of various cargo.
Timeline of development of the project:
- Sep 2005 - LOI Issued by GOP for Port Development at Karaikal
- Jan 2006 - Concession Agreement Signed
- May 2006 - Received MOEF Clearance for Phase 1
- Nov 2006 - Financial Closure for Phase 1 Achieved
- Feb 2007 - Final Tranche of Land Received
- Feb 2007 - Development for Phase 1 Commenced
- Mar 2009 - Phase 1 completed
- Apr 2009 – Karaikal Port Receives first Vessel
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