Adani Seeks Control Of GVK’s Mumbai Airport
Adani Airport Holdings has signed an agreement to acquire the debt of GVK Airport Developers.
Adani Group’s holding company is set to acquire a controlling stake in Mumbai International Airport Ltd., in a move that may provide the operator of India’s second-largest airport with the much-needed liquidity.
Adani Airport Holdings Ltd., also a subsidiary of Adani Enterprises Ltd., has signed an agreement to acquire the debt of GVK Airport Developers Ltd., according to an exchange filing. It will then convert the acquired debt to equity of GVK Airport Developers—the holding company through which GVK Group holds 50.50% equity stake in MIAL—on mutually agreed terms, subject to obtaining necessary regulatory approvals.
Adani “will also take steps to complete the acquisition of 23.5% equity stake from ACSA and Bidvest in MIAL, for which it has obtained the CCI (Competition Commission of India) approval.” ACSA and Bidvest hold 10 and 13.5% stake, respectively, in MIAL. That will give Adani nearly 74% stake in MIAL.
Adani Airport will offer a stand-still to GVK, the filing said, in addition to release of the guarantee given by GVK Power and Infrastructure Ltd. with respect to the debt acquired by it.
The aviation industry has been severely impacted by Covid-19, setting it back by many years and has impacted the financials of MIAL, according to GVK Reddy, founder and chairman at GVK. It was also to bring in a financially strong investor in the shortest possible time to improve the financial position of MIAL, and help achieve financial closure of the Navi Mumbai International Airport project, he said in a statement.
MIAL has Rs 8,646.74 crore of bank rupee term loans, Crisil had said in its Aug. 19 report, as it downgraded the company’s proposed Rs 2,000-crore non-convertible debenture issue. The airport operator, according to the rating agency, has a cash balance of around Rs 150 crore and unutilised working capital of Rs 110 crore as on Aug. 1, 2020.
Given current state of operations, its ability to generate accruals over near term is curtailed. Also, MIAL is not able to draw cash balance in escrow account because of pending judgment of Delhi High Court regarding payment of Annual Fee, Crisil said.
MIAL has upcoming debt servicing obligations of around Rs 65 crore on project loans within September 2020. But, according to Crisil, there’s limited visibility on treatment of accrued interest of around Rs 147 crore for period of moratorium from March to August 2020.