Afcons Infrastructure Limited has informed stock exchanges about the invocation of surety bonds worth EUR 17.85 million by its client SOCIÉTÉ AUTOROUTIÈRE DU GABON (SAG) in connection with a road construction project in Gabon. The company received communications from Lombard Insurance Company Limited regarding the bond invocation related to an EPC contract executed on September 10, 2020.

Project Details and Current Status

The project involves the design, construction, rehabilitation, and upgradation of National Road NR1 from PK 24+000 to PK 105+000, covering approximately 117 kilometers. SAG, an investment arm of Meridiam (France), was awarded a 30-year public-private partnership concession by the Republic of Gabon for rehabilitation, construction, financing, and operation of the Transgabonaise national road.

Major portions of the project have been completed and opened to traffic, with approximately 93.47% completion achieved as of December 31, 2025.

Contractual Disputes and Arbitration

Differences have emerged between Afcons Infrastructure and SAG regarding the certification of certain balance works and release of corresponding payments. The company has initiated arbitration proceedings under the International Chamber of Commerce (ICC) rules to address delays and additional costs incurred during project execution.

Afcons Infrastructure believes that the invocation of bonds by SAG is inconsistent with the contractual terms and spirit of the contract. The company continues to pursue its contractual and legal remedies while the matter remains under arbitration and is sub judice.

Financial Impact Assessment

The company has evaluated the financial exposure arising from the bond invocation and has made appropriate provisions and disclosures in accordance with applicable Accounting Standards. Afcons Infrastructure stated that the invocation is not expected to have any material adverse impact on several key areas:

• Company's liquidity position
• Ongoing operations
• Execution of other projects
• Overall order book
• Operational capability
• Business outlook

The dispute is characterized as project-specific and does not impact the company's broader business operations. Afcons Infrastructure has committed to keeping stock exchanges informed of any material developments in the matter as the arbitration proceedings continue.

AFCONS Infrastructure has secured two significant financial developments that strengthen its position in the infrastructure sector. The company has received a favorable arbitration award and obtained substantial bank guarantee facilities.

Financial Developments Overview

The infrastructure company has achieved notable progress through legal resolution and banking arrangements. These developments demonstrate the company's ability to resolve disputes favorably and maintain strong banking relationships.

Arbitration Award Details

AFCONS Infrastructure has received a favorable arbitration award worth ₹270.3 million. This award represents a positive resolution of a legal dispute, providing the company with financial recovery through the arbitration process. The successful outcome demonstrates the company's strong legal position and ability to protect its commercial interests.

Bank Guarantee Arrangement

The company has successfully secured a bank guarantee valued at ₹275.4 million. This guarantee enhances AFCONS Infrastructure's financial security and provides additional operational flexibility. Bank guarantees are crucial instruments in the infrastructure sector, enabling companies to undertake projects and meet contractual obligations with greater confidence.

Strategic Implications

These financial developments collectively represent over ₹545 million in positive financial impact for AFCONS Infrastructure. The arbitration award provides immediate financial benefit, while the bank guarantee strengthens the company's ability to pursue new business opportunities and fulfill existing commitments in the competitive infrastructure market.