GMR Infrastructure Ltd, operator of the Maldives’ biggest airport, fell the most in a week after the island-nation cancelled the Indian company’s contract to run the facility. GMR shares dropped 1.4 per cent, the most since November 22, to close at Rs 17.7, after slumping to the lowest level since their August 2006 debut. The stock has fallen 16 per cent this year, compared with a 29 per cent gain for the S&P CNX 500 Index. The market was closed for a holiday yesterday.
Maldives Airports Co. will take over the operations of the Male International Airport within seven days, Shaheema Hussain, its company secretary, said. GMR, which runs India’s biggest airport in New Delhi, and its partner had planned to spend about $510 million to upgrade the Male facility as the Bangalore-based company seeks to boost overseas business.
“If there is no compensation, it’ll be a big loss for GMR,” said Amit Srivastava, a Mumbai-based analyst at Nirmal Bang Institutional Equities. “It was a good project but it looks like it’s going to turn into a long-drawn legal battle.” The agreement provides for Maldives Airports to pay a compensation of $3.5 million to GMR over three years, Masood Imad, a spokesman for President Mohamed Waheed, said in a phone interview on Thursday from Male, the Maldives capital. The state-owned airport operator approached a Singapore court for arbitration and to establish the actual compensation amount, he said.
The cancellation was “unilateral and completely irrational,” GMR, controlled by billionaire G M Rao, said in a statement, adding it will challenge the move. The decision to annul the contract was based on consultations with legal experts in the UK and Singapore, Maldives Airports’ Hussain said.
