BQ Exclusive: GMR Group Approaches Banks To Restructure Debt Of Two Units

These businesses have been severely impacted by the nationwide lockdown imposed to curb the spread of Covid-19, prompting the group to consider a restructuring of the debt housed in these units.

Talks are at a preliminary stage and discussions are underway internally and with consultancy firms, the people quoted above said. The group is yet to submit a final proposal for restructuring to its lenders.

State Bank of India is the largest lender to group flagship GMR Infrastructure Ltd. and its subsidiaries.

According to a senior consultant, companies which seek a change in repayment terms in the current scenario cannot necessarily be classified as restructured accounts. The national lockdown is an unprecedented situation and nobody could have prepared for it, the consultant said. Still, until the Reserve Bank of India provides any special dispensation for rescheduling of debt in the current circumstances, lenders will treat any changes sought in debt repayments as restructuring, this person said, speaking on condition of anonymity.

In response to email sent to GMR Group on Tuesday and Wednesday, the company, in an email on Thursday, said that “None of GMR group companies in airports and transportation business have approached banks for restructuring of loans.” It added that SBI is not the largest lender to GMR.

The Airports Business

GMR Airports Ltd. has a debt of nearly Rs 10,000 crore, according to the bankers quoted above. The company has three airports under operation, located in Delhi, Hyderabad and Philippines. It also has two airports under development via 100 percent subsidiaries located in Goa and Greece. In addition, the company has received approvals to set up and operate airports in Nagpur, Maharashtra and Bhogapuram, Andhra Pradesh.

The functional airports have come to a standstill as international flights to and from India were stopped on March 20. Subsequently, local flights were also discontinued. To manage its finances, the group is seeking a waiver on revenue payment to the Airports Authority of India but is yet to secure it, the first person quoted above said.

According a CARE Ratings note dated Feb. 20, Delhi International Airport reported standalone revenue of Rs 3,793 crore with a net loss of Rs 112 crore in FY19. In the first nine months of FY20, it reported a total income of Rs 3,146.59 crore and a profit after tax of Rs 3.6 crore.

The Hyderabad airport reported total income of Rs 1,270.17 crore with profit after tax of Rs 566.13 crore in the first nine months of FY20.

In March, GMR Infrastructure, the parent company of GMR Airports, signed a share purchase agreement with France’s Groupe ADP. On closure of the deal, ADP will hold 49 percent stake in GMR Airports in return for an equity consideration of Rs.10,780 crore.

According to CARE Ratings, the deal is expected to close by June 2020. GMR Airports is expected to receive Rs 1,400 crore through a mix of repayment by GMR Infrastructure and equity infusion. This could help reduce the overall debt levels of GMR Airports, the rating agency said.

The Transportation And Logistics Business

GMR’s transportation and logistics business, which consists of four highways in different parts of the country, has also seen a drop in toll collections as non-essential travel and transportation has been suspended in the lockdown.

The transportation business has a debt of approximately Rs 2,500-3,000 crore and has been under stress for some time, which has worsened due to the lockdown, said one of the three bankers quoted above.

The GMR Group is also seeking to sell stake in the transportation business to deleverage the group’s balancesheet, according to the bankers quoted above.