Finally, Adani checks into GVK's airport

Hyderabad: After several twists, turns and legal tangles, Adani Group's relentless efforts to buy stake in Mumbai International Airport Limited (MIAL) paid off with city-based GVK Group agreeing to cooperate with the Gujarat-based infrastructure major. As a result, decks have been cleared for billionaire Gautam Adani-owned Adani Group to buy controlling 74 per cent stake in the Mumbai airport.

Under a complex deal reached between GVK and Adani groups, Adani Airports Holdings Limited (AAHL), a part of Adani Group owned by billionaire Gautam Adani, will acquire the debt of GVK Airport Developers Limited (GVKADL) through which GVK Group holds 50.5 per cent equity stake in MIAL. The MIAL in turn holds 74 per cent stake in Navi Mumbai International Airport Limited (NMIAL). As per the deal, AAHL will acquire the debt of GVKADL from its airport lenders.

This arrangement will enable AAHL to acquire GVK's 50.5 per cent stake in MIAL. Further, it will acquire 10 per cent stake from Airport Company of South Africa (ACSA) and 13.5 per cent from Bidvest, taking its total stake in MIAL to 74 per cent. The remaining 26 per cent will be with Airports Authority of India (AAI). However, the two groups did not give details of the financial terms of the transaction.

"The GVK Group and AAHL have agreed that AAHL will offer a stand-still to GVK, in addition, to release the guarantee given by GVK Power and Infrastructure Ltd with respect to the debt acquired by it," Adani Group said in a statement.

Adani Group said it will also "take steps to complete the acquisition of a 23.5 per cent equity stake from ACSA and Bidvest in MIAL for which it has obtained Competition Commission of India (CCI) approval."

Upon the acquisition of the debt of GVK ADL, Adani Group will take steps to obtain necessary customary and regulatory approvals, as may be required, to acquire controlling interest in MIAL," it said. Adani said it will infuse funds into MIAL as well as help achieve financial closure of Navi Mumbai International Airport so as to commence its construction.

In a separate regulatory filing, GVK said it has "agreed to cooperate with Adani Airport Holdings Ltd) under which the Adani Group firm will acquire debt from various lenders including a Goldman Sachs led consortium and HDFC. This debt will be converted to equity at mutually agreed terms".

GVK Reddy, founder and Chairman, GVK, said, "The aviation industry has been severely impacted by Covid-19, setting it back by many years and has impacted the financials of Mumbai International Airport Ltd. It was therefore important that we bring in a financially strong investor in the shortest possible time to improve the financial position of MIAL, as well as to help achieve financial closure of the Navi Mumbai International Airport project, which is a project of national importance. It is under these circumstances that we agreed to cooperate with Adani so as to achieve these twin objectives."

Further, when the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of liabilities to our lenders which is of utmost importance to the group, Reddy explained.

Adani Group had in March 2019 agreed to acquire 13.5 per cent stake of Bidvest for Rs 1,248 crore. However, GVK Group blocked the deal claiming the right of first refusal.

GVK, however, could not bring money to the table to buy Bid Services Division Mauritius' (Bidvest) stake and the matter went to court. Recently, the Central Bureau Investigation (CBI) registered a case against GVK Group and its promoters for alleged misappropriation of funds to the tune of Rs 700 crore in MIAL.

In October, debt-laden GVK Group entered into an agreement to sell 79 per cent of its stake in GVK Airport Holdings for Rs 7,614 crore to the Abu Dhabi Investment Authority (ADIA), Canada's Public Sector Pension (PSP) Investments, and state-owned National Investment and Infrastructure Fund (NIIF). On Monday, GVK Group terminated the agreement.