Tata, SSG, GIC seek Competition Commission approval for GMR Airports

Topics GMR Airports

GMR Infrastructure to be split into GMR Airports and other businesses
The four-way partnership of Tatas, GMR, GIC and SSG for airport businesses is set to take off, with the shareholders signing an agreement last week and the three new partners moving the Competition Commission of India (CCI) for approval.

This new entity is planned to take over GMR’s entire airport business, both within and outside the country. Simultaneously, a committee of GMR Infrastructure is working on a tax-efficient structure for offloading equity to the three new partners. Besides, the committee is working on a mechanism to make the functioning of GMR Airports Ltd acceptable to all shareholders, including a timeline of fund flow by the new shareholders into the company, said a person involved with the transaction. This committee reports to a directors’ committee of the GMR Infra board, constituting Kiran Kumar Gandhi, corporate chairman B V N Rao, chairman for transport and urban infrastructure N C Sarabeswaran, and Vissa Kameswari.

GMR is also looking to sell off or monetise its six road assets and Special Investment Regions in Tamil Nadu.  Beside selling its holding in the airport business, GMR Infra plans to provide exits to existing private equity investors which hold 5.8 per cent equity stake in GMR Airports.

“The structure will be finalised in not more than two to three weeks. We will be taking the necessary steps after CCI approval is in place,” said Saurabh Chawla, executive director, finance and strategy, GMR Infrastructure told Business Standard.

With a final scheme and CCI pproval, GMR would then be approaching the National Company Law Tribunal for statutory approval of the demerger, where views of creditors and shareholders would be sought. Final approval would come from the Securities Exchange Board of India.

Chawla said they were confident that both GMR Airports and the remaining businesses that would be housed in another company would be separately listed entities by March 2020. The Tata group through TRIL Urban Transport Private Limited has picked up equity. 

According to a GMR statement, the three new partners have proposed an investment amount of Rs 8,000 crore, comprising Rs 1,000 crore equity infusion in GAL and Rs 7,000 crore toward purchase of GAL’s equity shares from GIL and its subsidiaries. The demerger is a crucial exercise, through which the infrastructure major plans to go debt-free by March 2020 —the entire Rs 8,000 crore of proceeds are to be utilised for debt repayment.

“At present, GMR Infrastructure has corporate debt of around Rs 11,000 crore. The remaining debt would be paid through sell-off or monetisation of road and other businesses,” said Chawla. “Our profitability through sale of Chhattisgarh will improve by about Rs 500 crore and debt of Rs 5,926 crore is off the books of GMR Infra,” added Chawla. 

Debt restructuring in its power business is complete after sell-off of GMR Chhattisgarh Energy to Adani Power, for sale of the entire 47.62 per cent stake. 

Further, corporate guarantees to the extent of Rs 892 crore furnished by GMR Group companies — GMR Energy, GGAL and GMR Power Corporation — for the plant would be released. GMR also finalised a resolution plan on May 3 with its lenders for Rajahmundry Energy. Successful resolution of the two stressed power assets would deleverage and de-risk the company’s balance sheet.

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