Thailand-based GP Group has entered into an agreement to acquire 75 per cent stake in the civil EPC (engineering, procurement and construction) business of infrastructure firm Gammon India Ltd for about Rs 250 crore (approximately $37.8 million), as per a stock market disclosure.
As part of the restructuring process announced in November 2015, Gammon India is transferring its civil EPC business to subsidiary Gammon Retail Infrastructure Pvt Ltd (GRIPL).
Of the Rs 250 crore investment by GP Group, Rs 26 crore will be invested on consummation of business transfer agreement, which was executed on 12 February between Gammon India and GRIPL. The remaining Rs 224 crore will be invested on consummation of the scheme of arrangement for transfer of the EPC business into GRIPL for purchase of a 75 per cent stake, Gammon India said.
GP Group, which is headed by Indian origin businessman Kirit Shah and his family, will reconstitute the board of GRIPL.
GP Group is engaged in construction, logistics, aviation, energy supply, pharma, agro products, software and mining.
Meanwhile, the board of the company has also approved divestment of up to 30 per cent of its stake in Gammon Infrastructure Projects Ltd (GIPL), held through its wholly owned subsidiary Gammon Power Ltd (GPL). The company currently holds about 56 per cent of the equity capital of GIPL through GPL.
“The said shares have been pledged with lenders as security for the financial facilities extended by ICICI Bank and IDBI Bank. The company shall use the proceeds of the sale to repay ICICI Bank and IDBI Bank,” the filing said.
The deal is expected to be completed in 12 months.
Gammon India has been restructuring its nearly Rs 15,000 crore of debt through CDR since September 2013.