Mumbai: The GVK group is in talks with JM Financial Ltd to refinance up to ₹1,400-crore of GVK Airport Holdings Pvt Ltd's debt through a structured credit transaction, two people aware of the development said on condition of anonymity.
GVK Airport, the holding company of the group's airport business, is seeking to refinance a part of its debt, which was taken from HDFC Bank and Yes Bank to develop Mumbai International Airport Ltd (MIAL).
GVK Airport owns a 50.5% stake in MIAL, while South Africa's Bidvest Group Ltd and Airports Company South Africa Ltd hold 13.5% and 10%, respectively. The remaining 26% is held by the state-run Airports Authority of India (AAI).
The total debt of GVK Power and Infrastructure Ltd, which runs the airports business through GVK Airport, stood at ₹12,854 crore as of March 2018.
“GVK has been trying to find a way to retire or refinance its debt,” said one of the people cited earlier. It had initially wanted to list the airports business, but shelved the plan because of unfavourable market conditions. The company had also tried to refinance existing loans of $1 billion through dollar bonds, but market volatility and tepid response from foreign investors forced it to look at other options, this person said. “Talks are now on with JM Financial to refinance a leg of the outstanding loan,” added this person.
GVK Airports was bringing more predictability into its revenue stream by monetization its real estate assets and increasing the contribution of its non-aeronautical revenue component, this person said, adding that the company was now better placed to secure funding.
In November, GVK Power and Infrastructure told the stock exchanges that it had received shareholder approval to raise up to ₹8,000 crore, and to dilute more than 50% stake in GVK Airport. The proceeds would go towards reducing its debt.
On 27 August, Mint reported that the GVK group was in talks with at least four companies-Singapore's Changi Airport; German airport operator AviAlliance; India's sovereign wealth fund, National Investment and Infrastructure Fund; and Abu Dhabi Investment Authority-to sell a significant minority stake in Mumbai International Airport Ltd as part of its deleveraging strategy.
Under a 30-year concession, the government had granted the GVK Airport-led MIAL the right to operate, maintain and develop Mumbai's Chhatrapati Shivaji International Airport.
In 2010, GVK acquired a 13.5% stake in MIAL from Bidvest for around ₹650 crore. State-run AAI has the right to buy stakes in Mumbai airport, according to previously agreed terms, before it is sold to a third party.
“As a policy, we do not comment on any speculation in the media,” a GVK spokesman said in an emailed response. Emailed queries to JM Financial did not elicit a response till press time.