GMR Airports Infrastructure Ltd, the group holding company that was formerly known as GMR Infrastructure Ltd, on Monday announced the merger of GMR Airports Ltd, the operator of Delhi and Hyderabad airports, with itself, resulting in French airport operator Groupe ADP becoming the second largest shareholder in the merged entity.
The merger is expected to be finalized in the upcoming fiscal year, and after the merger, GMR Group will continue to be the largest stakeholder in GMR Airports Infrastructure (GIL), holding a 33.7% ownership interest. Groupe ADP will be holding 32.3%, and the public holding will be at 34% of the paid-up share capital.
“This is achieved through categorizing Groupe ADP’s shareholding in merged GIL into two instruments – ordinary equity shares and optionally convertible redeemable preference shares (OCRPS),” the company said.
“As envisaged earlier in 2020 to simplify the corporate structure and strengthen the balance sheet, this merger is a step in the right direction, taken at the right time. The merger will achieve financial and operational excellence and encourage innovation and adoption of new technologies, enabling GIL to stay ahead of the competition. We will continue to focus on selective growth opportunities whilst simultaneously maintaining our approach towards a conservative Balance Sheet,” Kiran Kumar Grandhi, corporate chairman of the GMR group, said in a statement.
The statement also said that the two companies expect the move to help in scaling up their ‘airport business overseas in India, South Asia, South East Asia and the Middle East as they anticipate that the privatization initiatives of governments across the world will speed up following a substantial increase in demand for air travel post the covid pandemic.’
In India, the government plans to invite bids for 11-13 government-owned airports, including profitable and money-losing ones, on a public-private partnership basis. Bids are expected to be aggressive, as companies like Zurich International Airports, Adani Group, and others will look to expand.
In 2020, GMR Group entered into a strategic partnership with Groupe ADP with the latter agreeing to purchase a 49% stake in GMR Airports Ltd.
It added that the GMR Group would continue to have management control over the merged entity while Groupe ADP will be categorized as co-promoters of GIL and have commensurate board representation.
The company said the merger would enable help it raise around ₹2,900 crore from Aéroports de Paris SA or Groupe ADP through 10-year foreign currency convertible bonds.
“GIL will raise ~EUR 331 mn ( ₹2,900 crore) from Groupe ADP through a 10-year 6.76% p.a. coupon (simple interest) FCCBs due in 2033. The coupon on FCCBs will be accrued till the end of the tenure. The conversion price is ₹43.67/- which is a 10% premium to the FCCB regulatory floor price under the FCCB Scheme,” the company said, adding that this will further deleverage by repaying corporate debt and also settling most of the contingent liabilities.
The merger would result in taking GMR’s partnership with Groupe ADP to the next level.
In addition, it will enable an earlier and full settlement of the earnouts, which for two years were adversely impacted due to the pandemic.
With the subscription of FCCBs by Groupe ADP, GIL will be further deleveraged by repaying corporate debt and also settling most of the contingent liabilities related to GMR Power and Urban Infra Ltd, the non-airport business of GMR Infrastructure Ltd, which was de-merged into GMR Power and Urban Infra Ltd in December 2021.