VLMS to Acquire Freightstar

Infrastructure India plc

Vikram Logistic & Maritime Services to Acquire Freightstar

Infrastructure India plc, the infrastructure fund investing directly into assets in India, is pleased to announce that on 28 October 2011 its subsidiary Vikram Logistic & Maritime Services Private Limited ("VLMS") has, subject to certain conditions, agreed to acquire the logistics business, related assets and associated liabilities of ETA Engineering Private Limited ("ETA"), operating in India under the brand name "Freightstar". The acquisition will also include an ETA subsidiary, Freightstar Private Limited ("FPL").

Completion of the transaction will position VLMS as one of the largest private multi-modal end-to-end logistics service providers in India. VLMS will have its own rail and road operations, captive terminals across the country, and a broad service offering for both domestic and export-import cargo.

Freightstar was founded by Dubai-based ETA Group and is a logistics service provider with a Category I license from the Indian Railways allowing it to operate container trains. Freightstar is developing two multi-modal logistics centres in Northern and Central India through FPL. Together with its 11 operating container trains, Freightstar has a pan-India presence. VLMS is a supply-chain transportation and container infrastructure company based in Southern India and is currently developing Free Trade Warehousing Zones in Bangalore and Chennai.

VLMS has agreed to acquire the Freightstar logistics business for consideration of approximately £9 million in cash (less any amounts advanced prior to completion). The purchase consideration is payable in installments during the six months following completion of the transaction. The consideration is to be funded by VLMS with support, as needed, from the Group. As part of the transaction, VLMS will acquire all assets and liabilities of Freightstar's logistics business, including assuming funded project indebtedness of £9 million.

Over the course of the next 30 months, VLMS expects to invest additional equity of up to £15 million and fully draw or refinance Freightstar's committed debt facilities. Such funding will be used to complete the construction of the two Freightstar container terminals in Northern and Central India, as well as funding the growth and working capital requirements of the enlarged VLMS group.

The Freightstar acquisition is subject to the satisfaction of a number of conditions, including the receipt of approvals for the transfer of Freightstar's Category I rail license to VLMS and the satisfaction of certain financing conditions. All these conditions are expected to be satisfied in approximately ninety days from the date hereof..

The logistics sector in India is seeing significant growth and this is expected to continue in the medium term. This acquisition is expected to provide attractive returns to the Group, with incremental upside expected through value-added logistics services for which the enlarged VLMS group has already entered into memoranda of understanding with customers.

Commenting on the investment, Sonny Lulla, IIP's Chief Executive, said:

"The acquisition of Freightstar presents an opportunity for VLMS to become a market leader in the Indian logistics sector, with company-owned facilities and a transportation network covering a large number of active and growing freight routes across the country. Freightstar and VLMS are uniquely complementary - the significant synergies between the two businesses facilitate the expansion of VLMS at lower cost and with diminished risk versus a greenfield approach."

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