Adani Enterprises Ltd, through its subsidiary Adani Airport Holdings Limited (AAHL), has signed an agreement to acquire the debt of GVK Airport Developers Limited (GVKADL), a subsidiary of GVK Power and Infrastructure Ltd, both companies informed the stock exchanges of values. When this transaction is completed, the Adani group will take control of the second busiest airport in the country in Mumbai.
GVKADL is the holding company through which the GVK group has a 50.50% stake in the share capital of Mumbai International Airport Limited (MIAL), which, in turn, owns 74% of the share capital in the new company Navi Mumbai International Airport Limited (NMIAL).
Under the agreement, AAHL will acquire GVKADL’s debt from its airport lenders. The GVK Group and AAHL have agreed that AAHL will also offer a stand-still to GVK to release the guarantee provided by GVK Power and Infrastructure Limited in respect of the debt acquired by it.
GVK said the deal with Adani included Adani’s acquisition of debt from various GVK lenders, including a consortium led by Goldman Sachs and HDFC; release GVK from various obligations, securities and corporate guarantees granted with respect to the debt that Adani will acquire; Adani converting the acquired debt into equity of GVKADL on mutually agreed terms; and the infusion of funds by Adani into MIAL to provide liquidity support.
An agreement signed in October 2019, in which the Abu Dhabi Investment Authority, the Public Sector Pension Investment Board of Canada, and the state-backed National Investment and Infrastructure Fund sought to purchase a 79.1 stake % in GVK Airport Holdings for ₹Rs 7,600 crore, stands finished.
Commenting on the development, Dr. GVK Reddy, GVK Founder and Chairman, said: “The aviation industry has been severely affected by covid-19, delaying it for many years and affecting the finances of Mumbai International Airport Limited. It was, therefore, important that we attract a financially sound investor in the shortest time possible to improve MIAL’s financial situation, as well as to help achieve the financial closure of the Navi Mumbai International Airport project. It is under these circumstances that we agreed to cooperate with Adani to achieve these twin goals. Additionally, when the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of our liabilities to our lenders, which is of utmost importance to the group. “
The Adani Group will also take steps to complete the acquisition of a 23.5% stake in ACSA and Bidvest in MIAL, for which it has obtained approval from the Competition Commission of India. The remaining 26% stake is held by the Airports Authority of India (AAI).
The acquisition of GVKADL debt is subject to the required customary and regulatory approvals.
“AAHL intends to infuse funds into MIAL to ensure MIAL receives much needed liquidity and also achieves the financial closure of Navi Mumbai International Airport in order to begin construction,” Adani Enterprises said in its exchange presentation.
Adani Enterprises Ltd, the flagship of the Adani Group, has also been awarded the operations and development rights of a 50-year lease for Ahmedabad, Lucknow, Mangaluru, Jaipur, Thiruvananthapuram and Guwahati airports, the first round of privatization carried out by the Union. government in February 2019. Once it takes control of these assets, AEL will be the largest private sector airport operator in the country.
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