GMR Airports to raise ~650 cr to pay off debt

Investment from Tata, Singapore wealth fund now delayed till December

With the delay in the proposed investment by Tata and Singapore’s sovereign wealth fund in the GMR group, GMR Airports (GAL) will now raise ~650 crore to pay off old debt by the end of this month and also give some money to the parent company. Of the proposed ~650-crore bond issue, GAL plans to give ~400 crore to GMR Infrastructure , which has a weak credit risk profile.

With the delay in the proposed investment by Tata and Singapore’s sovereign wealth fund in the GMR group, GMR Airports (GAL) will now raise ~650 crore to pay off old debt by the end of this month and also give some money to the parent company.

Of the proposed ~650-crore bond issue, GAL plans to give ~400 crore to the holding company, GMR Infrastructure (GIL), which has a weak credit risk profile. CARE has given an “A-” rating to its proposed non-convertible debenture (NCD) issue.

The remaining ~250 crore is expected to be used for meeting debt obligations in the near term.

In March, GIL had announced it had inked a pact with the Tata group, GIC (an affiliate of Singapore’s sovereign wealth fund) and SSG Capital Management. The investors agreed to pump in ~8,000 crore in the GMR group.

This would include ~1,000 crore equity infusion in GAL. The balance will be received by GIL.

The deal has taken longer than expected to finalise, facing delays because of various pending regulatory approvals. Now, it is expected to come in only by December.

The company, however, has to meet debt repayment obligations by the end of September. This was expected to be met through the investments.

GAL has reported a moderation in its financial risk profile, characterised by loss reported at the net level, subdued profitability and leverage indicators.

The additional bonds raised are expected to result in higher-than-envisaged debt levels, thereby weakening the financial risk profile for GAL, CARE said in a statement.

GAL is the holding company of the GMR group’s investments in the airport sector. GIL has a 91.95 per cent stake in GAL as of March 31.

GAL’S four major operating assets include DIAL, GHIAL, Cebu Mactan International Airport (Philippines) and Delhi Duty Free Services.

In FY19, GAL has reported a net loss of ~75 crore on a total operating income of ~283 crore, as against a net profit of ~215 crore on a total operating income of ~350 crore in FY18.

The moderation in income and profitability was largely on account of nonreceipt of dividend from DIAL. It was subdued because of accrued interest cost, owing to new NCDS raised and a few one-time expenses related to legal and professional fees.

The airport assets show a healthy business profile. The two main operating airports DIAL and GHIAL have demonstrated consistent improvement in their business performance over the years.

DIAL reported growth in passenger traffic of 5.32 per cent with total passenger traffic of 69.2 million during FY19 as against 65.7 million in FY18.