Federal Bank has sold its credit exposure in Chenani Nashri Tunnelway Ltd (CNTL) to Ares SSG Capital-backed asset reconstruction company at a discount of 25%, said people with knowledge of the matter. The Kerala-based lender has acquired road property owner, IL&FS. after sold the loan Transportation Network Limited ,ITNL), failed to close the deal I signed nearly a year ago to sell Square Capital-backed Cube Highways CNTL, Federal Bank recovered around 75 paise at Re 1 by selling its Rs 212.63 crore loan to Asset Care and Enterprise Ltd, the people said. The transaction closed earlier this week, one of them said.

Cube Highways had offered Rs 3,900 crore, leading to a recovery of around 82% for the lenders. But the long moratorium date of the settlement expired on August 30 this year, prompting the private bank to consider an out-of-court settlement. The second person said that Cube Highways had offered 100% recovery of debt for secured creditors and 40% for unsecured creditors. Federal Bank and ACRE did not respond to ET’s requests for comment.

Chenani Nashri Tunnelway, now renamed as Dr Shyama Prasad Mukherjee Tunnel, is India’s longest at 9.28 km and is located on National Highway 44. This reduces the travel distance between Jammu and Kashmir by 30 km. The tunnel was opened for public use in March 2017 and has been receiving semi-annual annuities since then. National Highways Authority of India (NHAI) Rs 635 crore. State-run NHAI has awarded ITNL with half-yearly annuity till 2037.

According to a document seen by ET, the project cost of CNTL was pegged at Rs 5,454 crore, of which ITNL provided equity of Rs 372 crore and banks provided loan of Rs 4,765 crore.

The company had distributed annual income of Rs 700 crore to lenders earlier this year. Documents show that IL&FS group companies have a total investment of Rs 1,295 crore in a combination of debt and equity in CNTL, while other financial creditors have an exposure of Rs 4159 crore.