Engineering firm GMR Infrastructure Ltd has agreed to divest 51 per cent equity stake in its 99-km highway project GMR OSE Hungund Hospet Highways Pvt Ltd (GOHHHPL) to its joint venture partner Oriental Structural Engineers Pvt Ltd (OSE), according to a stock market disclosure.
The move is part of the debt-laden company to reduce its debt by Rs 1,077.97 crore and enhance liquidity by Rs 85 crore. As of September 31, 2015, the firm had debt worth around Rs 43,440 crore.
GMR OSE operates the 99-kilometre Hungund-Hospet section of National Highway No 13 in Karnataka, which was won by the GMR OSE consortium in 2010 on a 'design, build, finance, operate and transfer' basis. The project is under GMR Highways Ltd.
“The overall sale consideration is about Rs 85 crore. It is about 1.1 times the book value investment. This is the third major divestment in GMR Group’s road portfolio,” the statement said.
The sale is envisaged in two tranches, with OSE initially acquiring 14.99 per cent equity stake of the project from the GMR group. The second tranche will be completed after getting approvals from National Highways Authority of India (NHAI), lenders of GMR OSE and other closing conditions typical of such transactions.
GMR Infrastructure, which has interests in airports, power and other sectors, currently has nine highway projects in its portfolio totalling 730km. It has invested Rs 6,000 crore in the projects to date.
This is the third major divestment by GMR which has adopted a strategy of raising funds through stake sale to pare debt and wants to have an ‘asset-light’ business model.
GMR Group has already offloaded stakes in two of its projects.
In February 2013, it had sold 74 per cent equity stake in Jadcherla Expressway Ltd in Andhra Pradesh to Macquarie-SBI Infrastructure Fund (MSIF) for Rs 206 crore ($38.11 million). Later in September 2013, it divested 74 per cent equity stake in GMR Ulundurpet Expressways Pvt Ltd to IDFC's India Infrastructure Fund for Rs 222 crore ($35.24 million).