Groupe ADP, GMR restructure airport deal due to coronavirus pandemic

With the deal closed, GMR Airports will be jointly owned by Airport De Paris and holding company GMR Infrastructure which will hold 51 per cent.
GMR group and Group ADP have restructured contours of the deal under which the French airport operator will pay Rs 9,720 crore instead of Rs 10,780 crore which it had agreed to pay earlier.

The restructuring shows the long lasting impact of Covid-19 on the aviation sector with air traffic taking more time to recover than originally expected.

However, ADP has increased the earn out payment by Rs 1,060 crore from Rs. 4,475 to Rs 5,535 crore. Earnouts are payment based on certain performance conditions GMR Airports has to achieve by 2024. The targets include increasing footfall of passengers and monetization of land in Aerocity in Delhi.

“In order to take into account the pandemic impact linked to the Covid-19 on the aviation sector and its medium term perspectives in the airports of GMR Airports, Groupe ADP and GMR have amended the share purchase agreement. As per the amendment, the price paid at second closing is reduced by Rs. 1,060 Crores compared to the initial purchase price of Rs. 5,532 Crores,” Groupe ADP said in a statement.

In February, GMR had signed an agreement with the owner of Paris Airport to sell a 49 per cent stake in its airport-holding company. The group was supposed to raise Rs 10, 780 crore from the deal, to pare its debt. The deal was structured in two phases and valued GMR Airports at Rs 22,000 crore.

With the deal closed, GMR Airports will be jointly owned by Airport De Paris and holding company GMR Infrastructure which will hold 51 per cent.

“The amount of Rs. 4,565 crore towards second & final tranche payment from Groupe ADP has been received. This money will primarily be used in servicing the debt which will help deleverage GMR Group further and result in improved cash flows and profitability,” GMR group said.

Despite the reduction in deal value, analysts tracking the company termed it positive. “The fact that despite a disrupting event like Covid-19, the deal has been closed shows the long term vision a strategic investor like Gruope ADP has taken. It has bet on the future potential of the assets of GMR Airports,” said Mohit Kumar, of IDFC Securities.

Airports across the world have been severely hit by the pandemic with Indian airports facing a steeper crisis as the government enforced a lockdown- one of the harshest steps taken across the world to curb the spread of Covid-19.

With no commercial traffic, GMR Group-owned Delhi and Hyderabad Airports only had cargo and repatriation flights to earn from. The sudden drop in air traffic has led to an almost complete paralysis of both aeronautical and non-aeronautical revenues. Due to the uncertain conditions, Adani group has invoked Force Majeure clause to delay the takeover of three airports from state-owned Airports Authority of India by a year.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel