Kotak Special Situations Fund (KSSF), managed by Kotak Investment Advisors Limited (KIAL), today announced that it has acquired a 74 per cent stake in HKR Roadways (HKR), and funded their debt for a one-time settlement (OTS) with existing lenders, for a total consideration of Rs 715 crore. This successful funding and resolution of debt are the first ones in the road sector for KSSF.

A consortium led by Gayatri Group owns HKR, a special purpose vehicle (SPV). The existing Hyderabad Karimnagar Ramagundan segment of State Highway One (SH1) was under design, development, finance, operation, and transfer for a four-lane toll highway project. The 207 km toll motorway project was launched in June 2014. The account became a non-performing asset (NPA) with all lenders due to delays in the right of way and severe traffic underperformance compared to earlier expectations.

An OTS of all dues has been approved by the existing consortium of lenders to HKR, subject to a Swiss Challenge Auction. HKR will no longer be an NPA account once the dues are paid. Eshwar Karra, CEO, Kotak Special Situations Fund, KIAL, said, “Acquiring a controlling stake in stressed assets like HKR is in line with our overall strategy of settling lenders in full cash against their dues and taking over such projects. HKR requires additional Capex to achieve commercial operation date (COD), 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.”