GMR Infrastructure Ltd has received a consent award from the arbitral tribunal in Singapore based on the settlement agreement signed by a set of private equity investors.

The investors include SBI Macquarie, Standard Chartered Private Equity, JM Financial Old Lane and others (investors), who had invested Rs 1,478 crore in the form of compulsorily convertible preference fhares (CCPS) in GMR Airports Ltd (GAL) in FY2011 and FY2012.

The settlement is in respect to certain arbitration proceedings administered by the Singapore International Arbitration Centre bteween GMR and these investors.

This development paves the way for value unlocking of the airport business. This will act as a catalyst for potential deleveraging of GIL balance sheet and value creation for shareholders.

GBS Raju, Chairman, Airport Sector, in a statement filed with BSE said: “This is a momentous occasion for GMR group. GAL, as an airport operator platform, has grown from 2 airports assets at the time of their investment to current 6 airports assets, including Nagpur Airport, for which we have emerged as the highest bidder.”

Following the settlement agreement, all parties decided to withdraw the ongoing arbitration and the investors along with certain of their affiliates would acquire 5.86 per cent equity of GAL at a 100 per cent valuation of Rs 21,000 crore and receive a payment of Rs 3,560 crore in lieu of their entire CCPS.

The cash payment would be partly funded by GIL through sale of its following airport related equity ownerships to GAL ralating to its entire shareholding of 40 per cent at CEBU airport in the Philippines at a 100 per cent valuation of $590 million, and its entire shareholding of 50 per cent in Clark EPC project in the Philippines at a 100 per cent valuation of $ 9.7 million and its entire shareholding of 40.1 per cent in Delhi Airport Parking Services Ltd at a 100 per cent valuation of Rs 499 crore.

These shareholdings are being acquired by GAL based on the valuation by Duff & Phelps. GAL would fund these acquisitions through a fresh issue of non-convertible debentures of Rs 2,005 crore subscribed by the investors and/or certain of their affiliates.

GIL will hold 91.95 per cent of GAL after the process, the employee welfare trust 2.19 per cent and investors 5.86 per cent.

“GMR also appreciates their trust and confidence in the future growth of this platform by being a continuing partner. We remain committed and bullish on the airport infrastructure business opportunities which encompasses the growth of consumer business and commercial property business surrounding the airport,” he said.

 

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