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GMR Hyderabad airport plans $300 million offshore bond issue

LiveMint logoLiveMint 05-03-2017 Reghu Balakrishnan

GMR Hyderabad International Airport Ltd (GHIAL) is planning to raise $250-300 million (Rs1,660-2,000 crore) by selling offshore bonds, two people aware of the development said.

The company has hired Citigroup Inc. and Bank of America Merrill Lynch (BofAML), among others, to conduct road shows that are expected to begin in a fortnight, the first of the two people said. Both spoke on condition of anonymity.

The debt-ridden GMR Group holds a 63% stake in GHIAL, government of India 13%, government of Telangana 13% and Malaysia Airports Holdings Bhd 11%.

The fund-raising comes close on heels of Delhi International Airport Pvt. Ltd, another GMR unit, raising $520 million through a similar issue in October.

The bonds will have a tenure of about 10 years and will be used for refinancing debt of GMR Infrastructure Ltd, said the second person on condition of anonymity. GMR Infrastructure has a total consolidated debt of Rs37,413 crore as of 31 March.

“The GMR Group is contemplating a variety of fund-raising options to reduce debt, refinance existing debt and lower cost of debt which include tapping bond markets in India and abroad. It will not be appropriate to speculatively comment on a specific initiative,” a GMR Airport Ltd spokesperson said. Emails to a spokesperson at Bank of America Merrill Lynch went unanswered while a spokesperson at Citi declined to comment.

The GMR Hyderabad Airport, incorporated to build, design, finance, operate and maintain the Rajiv Gandhi International Airport in Hyderabad, is a public-private partnership for the build, own, operate and transfer project.

The airport, which began commercial operations in March 2008, has a capacity to handle 12 million passengers and 150,000 tonnes of cargo every year in phase I, according to the company website.

GHIAL recorded annual sales of Rs615.49 crore and a net profit of Rs40.27 crore in 2015-16.

GMR Infrastructure, which has interests in airports, energy, transportation and urban infrastructure, has been exploring various options to bring down debt.

Last month, GMR Infrastructure’s subsidiary—GMR Chhattisgarh Energy Ltd—completed a strategic debt restructuring plan (SDR) by allotting shares to all the lenders. As per the SDR scheme, out of its total outstanding debt (including accrued interest) of Rs8,800 crore, debt to the extent of Rs2,992 crore has been converted into equity, following which the lenders will hold 52.4% and GMR the balance 47.6%.

In March last year, GMR Infrastructure had sold 51% in its 99-km highway project in Karnataka to its joint venture partners, which had earned it Rs85 crore and removed Rs1,077.94 crore in debt associated with the project off its books.

In December 2015, GMR had raised $300 million by issuing 60-year foreign currency convertible bonds to the Kuwait Investment Authority.

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