 "Adani's stake purchase in Gopalpur Port to provide debt relief to SP Group")
By Saikat Das
Adani Ports and Special Economic Zone Ltd. is set to buy a majority stake in Gopalpur Port Ltd. from Shapoorji Pallonji Group, a deal that would help lower the debt burden of the Indian construction group controlled by billionaire Shapoor Mistry.
Adani Ports agreed to purchase a 95 per cent stake in the port for 1,350 crore rupees ($162 million) from Shapoorji and Orissa Stevedores Ltd., according to a press statement Tuesday. Bloomberg News reported on the planned purchase earlier.
The transaction is expected to prevent a bond covenant from being triggered for Shapoorji, which would have led to increased borrowing costs. The group’s unit Goswami Infratech had to bump up yields by 2 per cent to 20.75 per cent after failing to sell the port by Dec 31. Not selling the asset by March-end would have resulted in a step-up in yields to 22.75 per cent.
“For Shapoorji, the deal assumes significance as this should help reduce high-cost debt,” said Amit Jain, chief strategist of global asset class at Ashika Group.
The SP Group has initiated a review of its debt load and engaged Houlihan Lokey Inc. to help it optimize its capital structure.
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For Adani Ports, India’s largest ports and logistics company, the purchase will provide access to the mining hubs of Odisha and neighboring states, Managing Director Karan Adani said in the statement.
“Acquiring Gopalpur port is another addition to its asset base though the deal is not large compared to the acquisition it generally makes,” Jain said. “It will only pave the way to add more freight revenue.”