GMR Airports Infrastructure Ltd (GIL) has announced the merger of GMR Airports Limited with GIL. The merger, which is subject to regulatory approvals and expected to be completed within the next financial year, would result in taking the GMR's partnership with Aéroports de Paris SA (Groupe ADP) to the next level, the company said in a release.
The merger will be a significant step towards further strengthening of the balance sheet to capitalise on upcoming growth opportunities, GIL said. GMR Airports Infra in 2020 entered into a Strategic Partnership with Groupe ADP, wherein the latter had agreed to purchase a 49 per cent stake in GAL.
At the time of the transaction, Groupe ADP had pegged equity earnouts of around 8 per cent of GAL and cash earnouts of Rs 1,060 crore to GIL, it said. "Merger signifies a transformative event and will be a value enhancer for all the stakeholders. Our strong partnership with Groupe ADP emanating from combined resources and expertise will enable the company to capture fast growing airport business opportunities and maintaining our leadership position in the airport business,” said GM Rao, Chairman of GMR Group.
GIL and Groupe ADP will settle the cash earnouts to GIL at Rs 550 crore and the equity earnouts whereby GIL's stake in GAL will increase to 55 per cent from 51 per cent pre-merger, the company said. Post completion of the merger, GMR Group, however, will remain as the single largest shareholder and in management control of GIL owning 33.7 per cent holding while Groupe ADP holding 32.3 per cent and Public holding at 34 per cent, respectively of the paid up equity share capital, the company stated.
GMR Infrastructure also said it will raise Euro 331-million (Rs 2,900 crore) from Groupe ADP through 10-year Foreign Currency Convertible Bonds (FCCBs). "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, among others, enabling GIL to stay ahead of competition,” said Kiran Kumar Grandhi, Corporate Chairman.
"We will continue to focus on selective growth opportunities while simultaneously maintaining our approach towards a conservative balance sheet," he added. In addition, the merger will enable an earlier and full settlement of the earnouts, which for 2 years were adversely impacted due to Covid conditions, the company said. With the subscription of FCCB's 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 (GPUIL), it added.
