Gammon Infrastructure Projects today said its arm Rajahmundry Godavari Bridge has terminated the concession agreement with Andhra Pradesh Road Development Corporation for a road bridge project on Godavari river.
Rajahmundry Godavari Bridge served a notice yesterday to terminate concession agreement for road bridge project on Godavari river, Gammon Infrastructure Projects said in a BSE filing.
The notice of termination of agreement was given on account of several breaches of the said Concession Agreement by Andhra Pradesh Road Development Corporation ('APRDC'), it claimed.
The project connects Kovvur and Rajahmundry in Andhra Pradesh. The Project is operational since November, 2015, and has contributed Rs.57.89 crores to the consolidated revenue of the company for financial year 2017-18, it said.
Rajahmundry Godavari Bridge Ltd ('RGBL') had entered into the Concession Agreement in respect of its project for design, construction, finance, operation and maintenance of 4.15 km long four-lane major bridge across river Godavari along with 10.34 km of total approach roads on either side of the bridge, according to the filing.
The Termination Notice was served by the RGBL due to failure on the part of the APRDC to cure / redress breaches of the Concession Agreement notified by RGBL vide its cure period Notice dated February 26, 2018 pursuant to the Concession Agreement.
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The concession agreement contemplated necessary safeguards and protections to the Lenders by way of Termination Payments which formed one of the basic foundations for Lenders to advance loans for the Project.
Consequent to serving of the Termination Notice, the Termination Payments aggregating to Rs 1,123.37 crore has become due and payable by APRDC within 15 days of the Termination Notice, it added.
Further, Union Bank of India, one of the Lenders for the Project has, on 9th July, 2018 initiated and served Corporate Insolvency Resolution Process against RGBL before National Company Law Tribunal, Mumbai Bench ('NCLT').
The RGBL has represented to Union Bank of India to reconsider moving the proceedings before NCLT and explore better options in the interest of the Project, Lenders and all Stakeholders, it said.