GMR Infrastructure Ltd has modified a deal to sell a stake in its airports arm to French company Groupe ADP after the coronavirus pandemic grounded flights worldwide and hammered the aviation sector.
The Indian infrastructure group had in February agreed to divest a 49% stake in unit GMR Airports Ltd to ADP for Rs 10,780 crore ($1.5 billion then) in two stages. This implied a valuation of Rs 22,000 crore for GMR Airports.
However, GMR said on Wednesday it has now tweaked the second stage of the deal because of the pandemic.
While the first stage involved the sale of a 24.99% stake for Rs 5,248 crore, the second phase was for the divestment of a 24.01% stake for the remaining amount. The second stage included a primary infusion of Rs 1,000 crore.
The February deal also included GMR receiving as much as Rs 4,475 crore from ADP as earn-outs depending on achievement of operating performance metrics and on receipt of regulatory clarifications over the next five years.
As per the revised deal, ADP has now paid Rs 4,565 crore, including the primary capital, to GMR. It has also increased the amount of the earn-outs by Rs 1,060 crore, to Rs 5,535 crore from Rs 4,475 crore.
This means that the total base size of the deal, excluding the earn-outs, has decreased to Rs 9,720 crore ($1.3 billion). This is about 9% lower than the original transaction in rupee terms and 13% in dollar terms; the greenback has strengthened against the Indian currency in recent months because of global uncertainties and risk aversion.
However, the overall deal value and the valuation after including the earn-outs remains the same.
GMR Infrastructure will primarily use the money it received from the transaction to repay debt, and improve its financial position. It will retain management control of the airports unit, which has a portfolio of seven airports.
ADP had snapped up GMR Airports from a consortium comprising the Tata Group, private equity investor SSG Capital and Singapore sovereign wealth fund GIC. The consortium had originally signed a deal for GMR Airports in March last year, but the transaction subsequently fell apart.
ADP operates airports In Europe, Africa, South America, and the Middle East. In 2019, it handled 108 million passengers in Paris and 110 million passengers in airports abroad.