Team News Riveting
Mumbai, August 31
The decision of GVK Power to terminate agreement with foreign lenders that had paved way for Adani Airports to acquire controlling interest in the Mumbai International Airport Limited (MIAL) had also come as a big respite for bankers.
Adani Group would take on current owner GVK Airport Developers Limited’s debt, and also acquire Bidvest and Airports Company of South Africa’s stakes in MIAL for the controlling interest. Bidvest and Airports Company of South Africa together hold a 23.5 percent stake in MIAL.
The GVK’s entire stake in MIAL is reportedly pledged with HDFC bank and YES Bank. The banks were concerned as it felt that parent firm’s poor liquidity position worsened by the effect of coronavirus on airport business will make it difficult to stick to repayment.
The transaction had come as a respite for everyone.
In a filing with exchanges today, GVK said it had terminated its agreement with Abu Dhabi Investment Authority (ADIA), National Investment and Infrastructure Fund (NIIF) and Canada’s PSP Investments, signed last year, for its airports business.
In October last year, GVK airports had inked a definitive agreement with the firms for an aggregated investment of Rs 7614 crore. The company had planned to utilise it to retire the debt obligations.
Reports said that the consortium led by ADIA, NIIF, PSP Investments had served a legal notice on the GVK group saying the stake sale in MIAL to the Adani group would be a breach of their agreement. It had come as a stumbling block for the Adani Airports to acquire the controlling interest in the Mumbai airport.
GVK clarified the reasons for termination of the deal with the foreign investors’ consortium in its filing to the exchanges today, citing a deadline for resolution with lenders, among other factors.
The company said in a statement that GVK had notified the Abu Dhabi Investment Authority, National Investment and Infrastructure Fund and PSP collectively that the transaction documents stand terminated, as it is no longer effective and implementable.
The reason for the decision was the terms of the transaction envisaged in the Transaction Documents were not implementable and the alternative proposals discussed would not provide a resolution to the lenders of ADL by the end of August, which was a requirement of their lenders, the company said.
