GMR Infrastructure to sell Kakinada SEZ, port biz to Aurobindo Realty

GMR Infrastructure (GIL) on Friday announced signing of definitive agreements for the sale of 51 per cent equity owned by its wholly-owned subsidiary GMR SEZ and Port Holding in Kakinada SEZ (KSEZ) to Aurobindo Realty and Infrastructure.

According to the deal, the 100 per cent equity stake of Kakinada Gateway Port held by KSEZ would also be transferred to Aurobindo Realty. This is also the latest in its larger plan to sell off some of its non-aviation businesses while not completely exiting non-aviation infrastructure segments.

As part of restructuring through demerger and deleveraging, it wants to place non-aviation business under GMR Power & Urban Infra, while having an independent aviation company. GIL is currently the holding company for all its businesses.

Total consideration for the sale of equity stake as well as the sub-debt in Kakinada SEZ is Rs 2,610 crore, the company said in a statement. Of the total consideration, Rs 1,600 crore would be received on the closing date and the balance over the next two to three years, which is contingent upon certain agreed milestones related to regulatory approvals and other conditions.

GMR Infrastructure has gross debt of about Rs 32,100 crore and net debt of Rs 26,300 crore as of March 2020. Its net corporate debt as of June 30 stood at Rs 6,700 crore, of which Rs 3,500 crore has been serviced from its deal with French company for airport business. Another Rs 1,600 crore will come from Aurobindo Realty, said a person in the know. The corporate debt does not include its debt at the asset or subsidiary level.

Kakinada SEZ is implementing a port-based multi-product special economic zone project at Kakinada in the East Godavari district of Andhra Pradesh. It owns KGPL that has the rights for setting up a greenfield commercial port in Kona village in the district.

At Kakinada, the group has 10,400 acre of land under development, of which over 5,000 acre is notified as port-based multi-product SEZ. Some portion of the land under development was earlier proposed to be declared at domestic tariff area.

The plan was also to have integrated refinery and petchem complex as anchor project for KSEZ, which could then be one of the petroleum, chemical & petrochemical industrial regions but it could not take off. Besides the Kakinada SEZ, GNR group is developing multi-product special investment regions across 2,500 acres at Krishnagiri in Tamil Nadu.

Some of its deleveraging moves, however, could not take off in the past. GMR, for instance, wanted to sell 49 per cent in its airport entity to French Groupe ADP but had to modify the terms, announced in February, after Covid-19 lockdown hit its airport revenues.

“The revised share purchase agreement, the second tranche of the investment for 24.01 per cent of GMR Airports (GAL) has been structured in two parts: A firm amount, immediately paid at second closing, for a total of Rs 4,565 crore, including Rs 1,000 crore equity infusion in GAL. Earn-outs amounting to Rs 1,060 crore, subject to the achievement of certain performance related targets by GAL up to FY2024,” GMR said in a July statement.

Besides, Sajjan Jindal promoted JSW Energy had called off its plan to acquire GMR Kamalanga Energy owing to the Covid-19 uncertainty. JSW had to take over the company as part of a lender-monitored sale plan.