A revised agreement saw the second tranche of investment for 24.01 % of GMR Airports structured in two parts: the first was a firm amount, immediately paid at second closing, for a total of Rs 4,565 crore, including Rs 1,000 crore equity infusion in GMR Airports.
The board of GMR Infrastructure (GIL) on Thursday approved a corporate restructuring exercise that will see the flagship infrastructure firm retain only the airport business listed as a separate entity. The remaining verticals –energy, EPC and urban infrastructure — will be carved out and housed in GMR Power and Urban Infra (GPUIL). At present, both GPUIL and GMR Power Infra, that housed the energy business, are units of GIL.
Post the de-merger, GIL will emerge as the country’s only pure-play listed airports company. The company currently runs airports in Delhi and Hyderabad and, in early July, had divested a 49% stake in the airports business to the Paris-based Groupe ADP.
A demerger would facilitate the entry of strategic investors and help the group pare debt currently at close to Rs 28,150 crore, analysts said. GMR Infra ended FY20 with consolidated revenues of Rs 8,555 crore,an ebitda 2,629 crore and a net loss of Rs 2,202 crore. It has been reporting losses since FY15. In Q1FY21, the company posted a loss of Rs 834 crore on revenues of Rs 1,006 crore, a fall of 44% y-o-y with business disrupted by the pandmemic.
The scheme creates a mirror shareholding of GIL in GPUIL with all existing shareholders of GIL becoming shareholders of GPUIL in the same proportion. The scheme envisages the issue of one additional share, of Rs five each, of GPUIL for every 10 shares held in GIL of Rs one each as on the record date. Post the scheme, all existing shareholders of GIL will continue to have the same shareholding in the company. The scheme also envisages amalgamation of GMP Power and Infra (GPIL) with GIL as a step preceding demerger.
In February, the GMR Group had signed an agreement with Groupe ADP to divest 49% stake in GAL for an equity consideration of Rs 10,780 crore. A revised agreement saw the second tranche of investment for 24.01 % of GMR Airports structured in two parts: the first was a firm amount, immediately paid at second closing, for a total of Rs 4,565 crore, including Rs 1,000 crore equity infusion in GMR Airports. The secondpart comprised earn-outs amounting to Rs 1,060 crore, subject to the achievement of certain performance related targets by GMR Airports up to FY24.
“Accordingly, Groupe ADP has increased earn-outs for GMR, which are now pegged at up to Rs 5,535 crore compared to the earlier Rs 4,475 crore. These earn-outs are linked to the achievement of certain agreed operating performance metrics as well as the receipt of certain regulatory clarifications over the next five years,” GMR had said in a statement late July 7.
Thursday’s restructuring announcement will simplify the structure and create pure plays in different businesses attracting sector-specific global investors and unlocking value for the current shareholders of GIL, the company said in a statement. The vertical split de-merger will go a long way in facilitating a understanding of the airport business independently.