 "GMR Airports")
GMR Airports is planning to raise Rs 5,000 crore through debentures primarily to refinance old debt. The company is also in discussions to secure financing for the development of an airport in Bhogapuram (a village in Vizianagaram district), with an estimated cost of Rs 4,700-4,800 crore.
The proceeds from non-convertible bonds (NCBs) will mainly be used for refinancing the existing outstanding bonds totalling Rs 3,906 crore, including accumulated interest as of September 30, 2023.
The total NCBs will not exceed the principal amount of Rs 5,000 crore. Any additional funds raised will also be utilised for investments and/or additional stake purchases in subsidiaries.
GMR has upcoming bond repayments worth Rs 1,406 crore (plus accrued interest) due in December 2023, which will be covered through the proposed bond refinancing.
As of March 31, 2023, the company held a cash and cash equivalents balance of Rs 435 crore at the standalone level.
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The proposed bond offering carries an ‘A-’ rating with a ‘stable’ outlook from CARE Ratings. The rating agency cited the healthy financial flexibility of the company as a factor in the rating, with GMR being the holding company of two major airports in the country: Delhi International Airport and GMR Hyderabad International Airport. Both these airports are among the busiest in India, and passenger traffic at these airports has shown robust growth in 2022-23 and the first quarter of 2023-24 (FY24), surpassing pre-pandemic levels (2018-19), according to CARE.
GMR’s greenfield airport in Goa became operational in January 2023 and successfully achieved the envisaged market share of passenger traffic.
Currently, GMR’s airport business is undergoing corporate restructuring, eliminating a layer from the holding structure. It will eventually become a listed entity on Indian equity markets following the merger.
GMR Airports Infrastructure, the group holding company that was formerly known as GMR Infrastructure, had announced earlier in the year the merger of GMR Airports, the operator of Delhi and Hyderabad airports, with itself, resulting in French airport operator Groupe ADP becoming the second largest shareholder in the merged entity.
After the merger, GMR will continue to be the largest shareholder, holding a 33.7 per cent stake, while Groupe ADP, a major international airport operator, will hold another 32.3 per cent. Both will be categorised as co-promoters. This restructuring will enhance financial flexibility by providing direct access to equity markets.
For the Bhogapuram Airport, based on the current project cost estimate, a pure equity investment of Rs 1,027 crore is required during the period from FY24 to 2025-26 (FY26). GMR will contribute 51 per cent of this amount, having already invested Rs 105 crore to date, with an additional Rs 418 crore expected to be infused over three years (FY24-FY26).
